An IPO debacle like that of Douglas against the backdrop of an unabated rapid bull run in the stock market is fortunately not an everyday occurrence. The shares of the perfumery company, which were placed at the lower end of the bookbuilding range, not only plummeted by double digits on the first day of trading but also continued to decline despite support from a high-profile underwriting consortium. This botched start serves as a warning sign for others in the pipeline , such as the bus platform Flix or the fuel card provider DKB Mobility.

While it may seem little comforting at first glance, it's still worth taking a look at the contrasting program being offered by newcomers to the stock market in other financial centers. In Switzerland, for instance, the largest European IPO of the year went smoothly. Galderma shares are already trading nearly a quarter above the offer price. Meanwhile, the Nasdaq and New York Stock Exchange can boast of two shooting stars among their recent stock market entrants: The chip company Astera Labs, which was even placed above the already upwardly revised price range, and still gained almost three-quarters on the first trading day; and the social media platform Reddit, which also had a rocket start.

The latter is all the more remarkable as investors apparently don't hold the young company's losses against it in any way – a signal of optimism for the technology segment battered by the recent sharp interest rate hikes. At the same time, signs are growing that the interest rate narrative in the stock market is at least no longer playing a leading role. Because the record-breaking surge in global markets has been fueled for months by the hope of imminent central bank interest rate cuts, this impetus is increasingly wearing off from the perspective of many market participants. Especially since a reliable pattern of planned interest rate moves has not yet emerged.

Therefore, investors are increasingly focusing on fundamental data such as earnings development or, again – plausible – growth prospects for companies. Seen through this lens, the warm reception for Galderma is just as understandable as the cold shower for Douglas. The Europe-focused business of a retailer of cosmetic products certainly does not offer thrilling growth prospects in an economically weak environment. Galderma, on the other hand, is a manufacturer not only of skincare products but also of medications for various skin diseases, for which significantly growing demand is predicted. Likewise, the young US chip company Astera Labs, which produces a range of semiconductors, convinces investors with excellent prospects thanks to the boom in artificial intelligence applications.

For this reason, despite a bumpy start to the year, the stage is set for companies with intact growth trajectories and robust business models – even at the German financial center, where an investor clientele willing to take on risks is still only in its infancy. After the abrupt downturn in the IPO climate at the start of 2022, when the Ukraine conflict and interest rate hikes both loomed as substantial headwinds, the audience is gradually warming up to newcomers. However, the exit pressure, which has built up mainly in private equity portfolios in the meantime, as well as the ongoing bull run in the markets, occasionally stir up desires in valuation that are difficult to achieve.

Therefore, the IPO of Douglas has certainly not done the financial center any favors. Pre-market startups, valued in the billions like Flix or Celonis, might consider using the subdued sentiment as a reason to delay their own debut.