IPO Pulses Entering Downturns | Nasdaq

In our last update in mid-January, Nasdaq’s IPO Pulses for the U.S. and Stockholm were signaling that initial public offering (IPO) activity would likely stay in an upturn into midyear. 

That may have been the case had the economic status quo (largely) held — and the uptrend in IPO activity did hold through Q1 — but a lot has changed since January and even since the end of Q1. 

IPO prospects are now clearly weakening, and this began before the historic tariffs announced on April 2. The deepening sell-off in April has added to significant slowdowns in the U.S. and Stockholm IPO Pulses. In fact, we’ve already seen multiple companies postpone IPOs in recent days.

Nasdaq IPO Pulse signals softer U.S. IPO activity likely ahead

Consistent with our analysis back in January, IPO activity continued its uptrend in Q1 2025, seeing 58 non-SPAC IPOs (chart below, green bars) – the most in over three years.

But a slowdown may be taking shape. 

After hovering around a 3¼-year high in December, the Nasdaq IPO Pulse has faded this year, falling to a 16-month low in March (blue line). 

Chart 1: Nasdaq IPO Pulse down to 16-month low in March, before reciprocal tariffs sell-off 

To determine whether this recent weakness signals a downturn in IPO activity ahead, we compared it against past downturns in the IPO Pulse that signaled genuine downturns in IPO activity and those that were false alarms. This comparison mirrors the method that the National Bureau of Economic Research uses to date U.S. recessions, considering the depth, diffusion and duration of the downturn across the components.

Unfortunately, for the first few months of a downturn, genuine downturns and false alarms are essentially indistinguishable. So, through March, it’s not possible to definitively say a downturn is assured, but the deepening market sell-off in April makes it quite likely a genuine downturn will take hold as soon as Q2. 

Stockholm IPO Pulse indicates cooling IPO activity likely ahead

In Stockholm, the situation is similar. Q1 IPO activity stayed in an uptrend in Stockholm, with eight IPOs (chart below, green bars) – the second-most in a quarter in nearly three years, only trailing Q4 2024’s 10 IPOs.

But, here too, the IPO Pulse is indicating that this upturn is unlikely to last.

After holding just below its summer 2024 high through January, the Nasdaq Stockholm IPO Pulse fell to a 14-month low in March (blue line). 

Chart 2: Nasdaq Stockholm IPO Pulse at 14-month low in March

In comparing this downturn to past downturns that anticipated genuine downturns in Stockholm IPO activity and false alarms, this downturn was already moving closer to a genuine downturn in March based on its depth and diffusion across components. However, it’s tracking false alarms in terms of duration, and all three elements – depth, diffusion, and duration – need to be in place for a genuine downturn to develop.

Like in the U.S., it would have been premature to declare a downturn in Stockholm IPO activity lies ahead through March, but the global sell-off in April makes a downturn highly likely.

Increased uncertainty and reciprocal tariffs weighing on equities

Through March, a key reason for the dimming outlooks in the IPO Pulses was increased uncertainty – a risk we highlighted in our 2025 outlook back in December. 

That increased uncertainty was driven by rapidly changing U.S. trade policy, pushing U.S. uncertainty to a record high in March (chart below, red line). Even though Sweden’s uncertainty (blue line) remained around its historic average, the uncertainty in the U.S. spilled over into international markets.

Chart 3: Uncertainty is record high in the U.S., but only average in Sweden

Since the reciprocal tariffs announced on April 2, however, the global sell-off in response is going to further dim the outlook.

In terms of returns, the MSCI Sweden (chart below, blue line) and MSCI USA (red line) both peaked in mid-February and have each fallen into correction – down 10% of more.

Chart 4: U.S. uncertainty and trade policy contributing to corrections in U.S. and Sweden

As a component in both IPO Pulses, market returns matter since it can filter into other components, like valuations, volatility, and sentiment, which is exactly what we’ve seen in the U.S. and Stockholm. This step down in market returns in April will likely push the IPO Pulses into deeper downturns.

Downturns in IPO activity in the U.S. and Stockholm likely lie ahead

In the coming months, IPO activity is likely to slow in the U.S. and Stockholm, possibly significantly, as historic changes in trade policy add to headwinds.

The severity of these downturns will become clearer in our next update in July.