2023 could signal a comeback in tech IPOs, analyst says

One analyst said that 2022 was a pretty IPO-less year, but 2023 could signal a comeback in the tech IPO market.

Ray Wang, the founder and principal analyst at Constellation Research, told Yahoo Finance Live this week that people are waiting for interest rates to stabilize. We think we might have some hope after a rate hike of 0.50% in December and 0.25% in January. Some tech companies are eyeing an IPO in 2023, including TripActions, the cybersecurity provider Versa Networks, and payments giant Stripe.

This would be a welcome shift after a year when IPOs were once a key feature in tech and the bull market at large, ground to a near-halt. In the year 2021, companies listed in the U.S. made $155 billion in proceeds from IPOs, according to EY and Dealogic data. That number was only $4.8 billion in the first half of 2022.

Since March, the Fed has been raising rates in order to combat inflation, and has led to the downfall of tech IPOs this year.

The IPO market sucked this year because of the high interest rates, according to Wang. If you look at tech IPOs, it was in bad shape. Revenues and revenue forecasts are down a bit. Half of the tech companies reported lower guidance and the other half held guidance, even though they're still growing. Where tech is primed to do well and where it is slowed down is where it's slowed down.

Cloud is feeling the pressure right now, which is jarring because it has been seen as an area of no-holds barred growth.

I came back from Amazon re: Invent and you can see the tension there, Wang told Yahoo Finance. People are trying to figure out how to consolidate cloud spend. They're trying to figure out how to get the most out of their AI and automation investments. There's a lot of investment going into AI, automation and analytics. Wang said that he is still big on cybersecurity stocks, and that Crowdstrike CRWD and Palo Alto Networks PANW are names he's expecting to look good. He believes that there is a lot of upside in Amazon in the long run but not right now, and that's why he is keeping an eye on Amazon AMZN Apple AAPL and Google parent Alphabet GOOG, GOOGL. I'm still bullish on Apple, and I'm still bullish on Google as well.