In the lead-up to the Thanksgiving holiday season, usually bustling with new IPOs, the market remains eerily quiet this year. A combination of factors, such as the lackluster stock performance in October, rising interest rates, and underwhelming showings from recent IPOs, has led many potential candidates to reconsider or postpone their public debuts.

Experts suggest that the unfavorable conditions in the market have created a situation where "bad companies can't go public, and the good companies don't want to go public in a bad market." The sustained climb of the 10-year Treasury yield has also dampened the IPO market, acting as a significant deterrent for potential IPO candidates.

Waystar, a company considering launching its roadshow, reportedly delayed its IPO until December or even as far as 2024. Similarly, Panera Bread recently laid off 17% of its corporate staff ahead of a possible IPO in the coming year. Other prospective IPO candidates may have to endure substantial valuation decreases. Klarna, the popular buy now, pay later firm, has no immediate plans to go public despite a valuation of $6.7 billion, significantly below its previous valuation of nearly $46 billion.

Even Chinese fast-fashion giant Shein is indecisive about the timing and valuation of its IPO. While the company aims for a range of $80 billion to $90 billion, its most recent funding round valued it at $66 billion in May. This hesitation among potential IPO candidates is a stark contrast to previous years when November and December saw a surge in major IPOs.

In 2021, well-known companies like Rivian, Hertz, Doordash, and Airbnb went public during the year-end IPO gold rush. However, the trend seems to have fizzled out in 2022 and continues to do so this year. According to Renaissance Capital, only 96 IPOs have raised $18.8 billion in 2023, following a particularly dismal year in 2022 with a mere $7.7 billion raised.

The recent string of lackluster IPO performances has added to the hesitation among potential debutants. Some of the largest IPOs of the year, including Arm, Kenvue, Birkenstock, and Instacart, are currently trading below their offering prices. Klaviyo, a marketing automation company that went public in September, is also trading 8% below its offering price of $30.

Not all hope is lost, however. Market experts believe that if the current rally continues, December might show increased IPO activity. The anticipation of a market upward trend plays a crucial role in enticing companies to go public. While the pipeline of IPO candidates has dwindled, there are still some small firms, like BKV, a U.S. natural gas producer, and homebuilder Smith Douglas, who recently updated their prospectus, indicating their aspiration to go public.

As for older IPO candidates like Reddit and Stripe, their appeal may diminish over time. The current market excitement revolves around the AI space, although most AI companies are not yet ready for their public debut. Arm, however, stands as an exception due to its involvement in AI, receiving a "halo effect" that shields it from significant declines. Despite its weaker outlook, Arm reported its first earnings as a public company on Wednesday night.

For IPO candidates, choices appear limited. They can either go public with significant valuation cuts, remain private with the possibility of reduced venture capital funding, or pursue mergers or business closures. The private financing markets are proving no better than the public financing markets, leaving many of the approximately 800 tech unicorns in a precarious position. As Greg Martin from Rainmaker Securities warns, "We are starting to see unicorns die," and the M&A route may be increasingly likely for numerous companies.