The government shutdown combined with a shift to a conservative funding attitude has led to a cooling period for U.S. IPOs.

Due to the government shutdown and a cautious attitude among investors, the strong momentum of initial public offerings (IPOs) on Wall Street has cooled off. According to reports from the Associated Press, many IPOs originally scheduled for the end of this year are likely to be postponed until next year, as the U.S. Securities and Exchange Commission (SEC) is working to clear hundreds of backlog registration applications. Meanwhile, the stock prices of phenomenon-level U.S. stocks like Figma and other listed companies have recently performed poorly, and investors are beginning to worry that the market capitalization of many IPO stocks is being overvalued.

The momentum of IPOs is cooling down due to the government shutdown and the holiday economic slowdown.

Bill Smith, CEO of Renaissance Capital, wrote in a report to investors. The SEC's backlog of applications, the upcoming holiday economic slowdown, and the pressures faced by AI and other tech stocks have all dealt a blow to expectations for a short-term rebound in the stock market. Despite the backlog, Wall Street still expects several IPO companies to go public in November and December, which have previously entered the later stages of the regulatory process.

The central bank corporation is one of the large companies listed after the government shutdown ends, with the holding company of the Central Trust Bank raising $373 million through an IPO on Thursday. However, according to Renaissance Capital's forecast, November is expected to be one of the quietest months for IPOs in 2025. Wall Street anticipates that medical supplies company Medline may also go public in December, with a potential fundraising amount of up to $5 billion. Additionally, cryptocurrency technology company BitGo may also go public next month.

The market has become cautious, which has also suppressed the gains of some recent IPOs, leading to significant declines in the stock prices of certain companies since their listings.

The phenomenon-level US stock Figma has almost completely retraced.

Web design software company Figma (NYSE: FIG) has seen almost all of its price gains since its listing in July erased. The company's stock price more than doubled on its first day, with an issue price of $33 per share. The current stock price is slightly above the issue price.

Sweden's “buy now, pay later” company Klarna completed its IPO in September at a price of $40 per share, and its current stock price is close to $29 per share. Cloud computing company CoreWeave also completed its IPO in March at a price of $40 per share. The company’s stock price soared in the months following its listing but then significantly fell back to around $72 per share. Software company Navan went public during the government shutdown at a price of $25 per share but has not made much progress, with its current trading price around $15.

The S&P 500 index performed poorly in November, declining by 3.5% for the month, with most of the drop led by the technology sector, which had previously risen due to enthusiasm around artificial intelligence development. However, Wall Street analysts remain concerned about whether these gains are justified. Nevertheless, the S&P 500 index is still up over 12% year-to-date, while the tech-heavy Nasdaq index has risen over 15%.

As of last Friday, Renaissance Capital's IPO index has fallen nearly 0.8% so far this year and has been declining since mid-October. Samuel Keel, head of global equity capital markets at Mergermarket, stated that investors are quickly cashing out as they are unwilling to take on long-term risks.

Looking ahead to 2026, the overall demand for IPOs remains strong.

Nonetheless, the overall demand for IPOs remains strong. Even though there has been a recent pullback, the overall market valuation is still relatively high, especially in the highly influential technology sector. IPOs have historically been another way for investors to enter the market at a lower cost.

David Kaufman, partner at Thompson Coburn LLP and co-chair of the firm's corporate and securities practice, stated that as fund managers, there is an increasing need to seek alternative profit channels. Many large mutual funds and fund managers are holding significant amounts of cash but have nowhere to place it, and IPOs are one of the options.

The overall market direction in the new year will determine the cost and types of IPOs, with some highly anticipated large tech companies potentially going public in 2026, including AI-focused software company Databricks and graphic design application Canva. Wall Street also views fintech company Plaid as another potential IPO candidate in 2026. Any noticeable slowdown in IPO activity for the remainder of this year partially masks the undercurrents of companies navigating the regulatory approval process.

This article discusses how the government shutdown and a shift towards a conservative stance on funding have led to a cooling period for U.S. IPOs, first appearing in Chain News ABMedia.