Never-Ending Government Shutdown Could Kill 2019’s Largest IPOs

Due to the partial government shutdown, the SEC is unable to process any IPO filings.

Due to the partial government shutdown, the SEC is unable to process any IPO filings. Drew Angerer/Getty Images

The partial government shutdown has dragged into day 32, and there is still no end in sight. A prolonged government disfunction like this has far-reaching consequences. Not only is the government risking losing tens of thousands of federal workers (if they keep being asked to work without pay), it could also miss a critical opportunity to turn around the embattled financial market.

In the past 32 days, the U.S. Securities and Exchange Commission (SEC), a federal agency, has built up a pile of backlogged IPO applications, including many hotly anticipated deals such as Uber and Lyft.

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The ride-sharing duo, each valued at over $10 billion, have both submitted confidential IPO filings to the SEC, but neither has yet to hear any feedback from the agency on how to move forward.

After an ugly stock market rout in the last three months of 2018, investors are anxiously hoping that Uber and Lyft’s mega IPOs could kickstart a rebound. But the SEC’s idling has made this prospect dimmer.

“This time last year, we’d seen eight IPOs raising $4 billion for 2018. But this year so far, we’ve seen zero,” Kathleen Smith, principal of Renaissance Capital, provider of IPO ETFs and institutional research, told Observer.

If the SEC shutdown continues beyond February 14, Uber and Lyft’s financial statements in their original filings will become out of date, and both companies will have to submit new audited financial reports for the latest quarter, which could cause longer wait periods on the companies’ end.

Also delayed will be other high-profile tech IPOs, such as Slack, Pinterest and WeWork.

“Delays of these IPOs are going to hurt the IPO market in general, create more backlogs for the SEC and may cause companies to rush out the [IPO] door later in the year,” Smith said. “And that’s usually not good for the market.”

Never-Ending Government Shutdown Could Kill 2019’s Largest IPOs