The Nasdaq Pulls Ahead of NYSE in IPO Activity


The Nasdaq exchange has officially overtaken the New York Stock Exchange (NYSE) in year-to-date, initial public offerings (IPOs). The dealer’s market was able to pull forward with two huge IPOs by Warner Music Group and ZoomInfo. This year, firms debuting IPOs on the Nasdaq have raised a collective $12.2 billion, while those launching IPOs on the NYSE have raised only $10.9 billion.

At the height of the coronavirus pandemic in the U.S., IPOs had all but ceased to occur. The looming specter of a recession convinced many companies to cancel pre-planned IPOs, and push them to a future date.

In the first week of June, both stock exchanges have seen a great jump in activity, still 2020 is a much slower year overall compared to 2019, which was saw an IPO mania.

As of this week, the NYSE has hosted only 27 IPO launches, while the Nasdaq has seen 44. And in the last month alone, the NYSE had only seen a single IPO debut, compared to the Nasdaq, which has debuted 10, a spike perhaps attributed to the lull that took place from early March through the beginning of May.

The two standouts from this group are media company Warner Music Group and contract database program ZoomInfo. Warner Music has taken the lead for biggest IPO of 2020, offering 77 million shares, which raised over $1.925 billion. ZoomInfo had a groundbreaking day on its June 4th release, raising over $900 million while offering only 44.5 million shares.

The Nasdaq vs. The New York Stock Exchange

There are a few notable differences between these two flagship stock exchanges.

The main difference, which in all likelihood doesn’t have a huge effect on this year’s disparity in IPO activity, is that the Nasdaq is a dealer’s market, while the NYSE is an auction market. This means that in the Nasdaq, investors trade through an intermediary dealer, while in the NYSE, investors trade between themselves on an auction basis.

But another difference that may have played a role in boosting the Nasdaq’s relevance this year is that it tends to include more tech companies than the NYSE. The focus on micro-capitalization stocks and tech stocks make the Nasdaq much more volatile and growth-oriented than its counterpart. Given the growth in the tech industry and the collapse of retail and other more traditional sectors, it makes sense that the Nasdaq is flourishing in this time of rapid consumer shifts. Traders focused on the Nasdaq are also much more accustomed to volatility, a skill that surely came in handy in this unpredictable year.

But the New York Stock Exchange has always offered a sense of spectacle and prestige to debuting companies. When companies choose to launch on the NYSE, they get to ring the opening bell and watch as the bustling market comes to life. But the picture-perfect opportunity has disappeared amid the pandemic. With the floor of the stock exchange closed due to COVID-19, the visible opportunity has vanished, and with it, some of the pomp of launching an IPO there.

It will be interesting to see if the NYSE pulls forward later in the year, particularly as New York City slowly returns to pre-pandemic normalcy. Still, it will be hard to eclipse the Nasdaq’s strong performance.