The IPO drought is expected to continue for the rest of 2024, according to NASDAQ CEO Adena Friedman. Speaking at Axios's BFD event, Friedman attributed the sluggish IPO market to the struggles of small-cap companies and late-stage startups.

Friedman highlighted the disparity between large-cap companies, which have performed well, and small-cap companies, which have struggled. The S&P 500, dominated by large-cap companies, has seen a 22% increase, while the small-cap index has declined by 10%. This trend has made it challenging for late-stage startups to go public, as they often lack a strong year of financials and are still burning through cash to support their growth.

In the current high-interest-rate environment, companies that are not yet profitable face a tough reception from public investors. As a result, many startups are opting to stay private, with the secondaries market providing a safer haven for companies to raise capital and provide liquidity to investors and employees.

Friedman expressed optimism that the IPO market will recover in 2025, citing recent successful biotech IPOs as a positive sign. However, the data suggests that 2024 will not match the number of IPOs seen in previous years, with only 51 IPOs so far this year, compared to 86 in 2023 and 81 in 2022.

Despite the current challenges, Friedman emphasized the importance of companies going public, as it allows for wealth distribution beyond a small group of private investors. With companies like Chime, Klarna, and CoreWeave reportedly preparing for IPOs, there is hope that the market will rebound in 2025.