Forge’s Public Debut Today Will Pose Fresh Test To SPAC-Led Exits

After completing its merger with Motive Capital Corp as part of a SPAC combination, Forge Global will begin trading on the New York Stock Exchange today. When the blank-check partnership was announced last September, TechCrunch reported it. Here’s our first look at the deal’s numbers. To say the IPO market has altered since last September is an understatement; in the aftermath of a steep repricing of the value of technology stocks since late-2021 highs, the pace of public offerings from such firms has slowed to a crawl. Private firms with high valuations that could have considered an IPO have backed away from their ambitions, and the number of new S-1 filings is negligible.

The timing of Forge’s public debut is emblematic of this. The company’s merger and IPO will give statistics on market demand for similar transactions, and the stock price will reflect, to some extent, the amount of investor optimism in other firms that aren’t coming public. Allow me to explain. Forge is a marketplace for private shares, or stock in unicorn firms. Because Forge’s business model is essentially transactional, the more people who purchase and sell those shares, the more money the company makes.

Optimism about Forge’s future is reliant on the company’s supply being strong; too many IPOs would reduce private-market availability of hot-company shares, limiting Forge’s growth possibilities. The irony is that the better Forge does in today’s trading, the more probable it is that other tech companies will get off the sidelines and return to the public markets. If they do, the act may restrict Forge’s market by limiting the amount of unicorns that investors want to participate in but can’t due to their private-market status. In a moment, we’ll go through this in further detail.

In compared to the emotional impact of the company’s trailing performance and the cash grab from its SPAC transaction, the conflicts between Forge’s public-market success and the pool of firms it wants to list on its private market are minor. So, before we get too carried away with our market theories, let’s discuss statistics. Cash, expansion, and advice.

Forge stated in its SPAC investor presentation that sales in 2021 will be about $123 million and $151 million in 2022. However, given that other SPAC combinations have missed expectations, we’ll examine Forge’s 2021 actuals to evaluate not just how the firm fared, but also how it performed in comparison to previous guidance. Here’s what the firm said about sales for 2021 early this year, and what it predicts for 2022, according to the most current data.