The reopening of the IPO market is, once again, delayed.

For a moment this fall, it looked like the window for initial public offerings would be pushed open. Four big companies, three of them in the technology sector, moved forward with their plans to sell stock in blockbuster IPOs. Chip designer Arm HoldingsARM 1.34%increase; green up pointing triangle, grocery-delivery company InstacartCART 2.98%increase; green up pointing triangle and e-commerce marketing company KlaviyoKVYO 1.48%increase; green up pointing triangle all priced their IPOs at the high end of or above expectations and initially traded higher. 

A few weeks later, German shoemaker Birkenstock listed on the New York Stock Exchange, and the shares dropped. Now, all but Arm trade below their IPO prices.

No one expected a flood of IPOs to follow, but bankers, investors and other deal advisers said the disappointing performance by the quartet has likely shut the door for the remainder of 2023.

In recent weeks, healthcare-payments company Waystar delayed its IPO, likely until 2024, The Wall Street Journal has reported.

Volatile stock markets have private companies worried they can’t fetch higher prices if they try to list. Investors who buy deals don’t want to get stuck with more underwater offerings. High interest rates are offering attractive alternatives with less risk. 

Here’s what IPO investors and bankers are watching to see when their moment might come back:

A boom in initial public offerings dried up in 2022 around the time the Federal Reserve started raising interest rates. Share prices of publicly traded technology companies tumbled, deterring many IPOs because private companies worried they would be less likely to snag higher valuations. Each dot represents an IPO. Shades are darker where dots overlap during periods of heavier activity.

The dots are stacked vertically by day. In 2021 during a busier stretch, there were some days with eight or nine initial public offerings.

In 2020 and 2021, there were a total of more than 600 initial public offerings, not including deals involving special-purpose acquisition companies. In the nearly two years since, there have been fewer than 200.

The average size of IPOs has also declined. There were two notable exceptions this year: Johnson & Johnson’s consumer healthcare business Kenvue and chip designer Arm were among the largest offerings in the past four years.

Besides the slowdown in offerings, newly public companies haven’t performed well. Of companies that went public in traditional IPOs since the beginning of 2020, more than 80% are currently trading below their initial offering price.

The performance of recent IPOs has to improve to pave the way for new offerings, bankers and investors say. Fund managers who bought these IPOs say they are unlikely to pony up money to bet on another new listing.

Interest rates have soared since the end of 2021, making safer investments such as money-market funds more attractive. New listings are one of the riskiest investments given many companies going public are often young, growth-oriented and share only a short history of audited financial results.

The stock market isn’t helping either. Bankers tend to boast that they can get IPOs done in down markets as well as up ones—as long as volatility is low. Over the past two years, however, stock-market swings have been dramatic at times, with investors reacting to everything from surprise interest-rate increases to a regional banking crisis. The IPO market has often slowed sharply or outright stopped during these periods.