US Stock Sales Soar To $435 Billion In 2020, With IPOs Raking In $100 Billion

Despite the pandemic, U.S. stock sales soared to $435 billion in 2020, surpassing the previous record of $279 billion in 2014.

The stock shopping spree was fueled in part by intense initial public offering (IPO) activity, which saw companies raise $100 billion this year in their market debuts. The last highest year was 2014, which bore witness to Alibaba’s massive market debut, according to Bloomberg.

This year’s IPO class has also generated far better returns than in the past, with stocks like Snowflake, Airbnb, and Unity Software soaring in recent weeks. Companies that raised over $1 billion in their debuts are now trading 81 percent above their average offering price. Secondary offerings were also hot, raising a record-breaking $260 billion, said Bloomberg.

Biotech companies have been particularly attractive to investors, with more than 100 companies raising approximately $23 billion in 2020. Tech was the next biggest gainer, raising around $19 billion. Foreign companies were also on a roll, taking in more than $21 billion, with Chinese companies raising the most despite chilly relations with the U.S., Bloomberg said.

Chinese companies held 30 IPOs this year, raising $11.7 billion, despite a tumultuous year in China-U.S. relations. The IPO rate for Chinese companies is the highest since Alibaba’s massive market debut in 2014, according to CNBC, citing a new report from Renaissance Capital.

Also popular: special purpose acquisition companies, or SPACs. A rarity in the past, SPACs allow companies to avoid the costly and time-consuming process of holding an IPO by allowing them to access the capital markets through a merger with a publicly traded company that has no active operations.

According to Bloomberg, most of the SPAC deals this year were handled by Credit Suisse Group and Citigroup, while Morgan Stanley and Goldman Sachs Group combined oversaw 20 percent of the year’s IPOs. Secondary offerings were shepherded largely by Goldman Sachs, JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp.

European markets are also reportedly looking to get in on the SPACs action. In September, The Wall Street Journal reported that the London Stock Exchange in particular has been mulling ways to help speed IPOs.

At-the-market stock sales, where companies sell shares directly into the market, were also more popular this year, as were registered direct offerings, which bypass underwriters. Direct offerings were conducted by BeiGene and Carvana, while Carnival Corp. opted to use both tactics. United Airlines also held an at-the-market sale, Bloomberg said.

Shares of payment companies have also rallied this year, led by Square and PayPal.