Hello everybody, thank you so much for coming out today. My name is Dan Primack, business editor at Axios. Unlike Lightspeed, I have invested zero dollars in AI companies, but I have written about all of them. So we're going to do two things quickly. First, just so you all know, we will have another session here tomorrow at the same time. We hope to see you all back here. And I'd like to invite our first guest, which is Lynn Martin, president of the New York Stock Exchange.
Hey, thanks for having me, Dan. Thank you for being here in this cozy little spot in your Swiss Chalet.
In my Swiss Chalet. We were going to do this in Swiss German, but then we both realized we don't speak it, so we will not do that. Right, so Lynn, let me start with this. We're kind of in year three of the AI hype cycle, but we're also in year three of 'IPOs are coming back' this year. You run New York Stock Exchange. Why is 2025 going to be different than say 2024?
I don't have my stats on 2024. I don't know if we are in year three of the 'IPOs are coming back' hype cycle because 2022 is a challenging year and it felt like it was going to be a challenging year, mainly because we saw that volatility start to ramp back up in 2022. And unfortunately, almost three years ago, there was the Ukraine invasion by Russia. Reasons to be optimistic for 2025: this is the year IPOs come back. Look at 2024. 2024, you did see the green shoots of the IPO markets come back. And if we look at the IPOs that happened on the New York Stock Exchange, in secondary trading, in aggregate, they are 58% above their IPO price. Now that's a darn good stat. It means that there is investor demand and when the right companies come to market, they see that value accretion. We're so proud that nine of the top 10 IPOs from a performance perspective last year happened on our platform. But you know, a tremendous amount of capital got raised last year when you consider that we had a US election, a pretty controversial US election that ebbed and flowed throughout the course of the year, is probably the right way to phrase it, causing volatility in markets. What that meant for the IPO markets is it felt really good up until June, and then the market open, shut, open, shut, open, shut throughout that election period. We've got some deals on the road. We had an IPO last week that also performed really well, a company called Flow in the LNG energy space, priced at $24 and closed Friday at $30. So again, green shoots are there.
We in the press, we always look for companies that are going public and then say, 'Oh, that's tailwinds, like they did it and thus others are going to follow.' You have a big one on the road right now, Venture Global, which is an LNG company, not an AI company, not a tech company, could be literally a billion-dollar IPO. Do you view that as one that if successful will have tailwinds for other companies, or is that more of a one-off because it's not unique but relatively unusual and it's maybe a little bit like what Arm was a year ago or a year and a half ago, it kind of stands on its own?
It does stand on its own because of the size of that IPO. I mean, they're talking around a hundred billion dollar valuation at IPO, which is like a small AI company. Exactly. But importantly, you think about it, you think about what is coming out of the US, some of the initial signs of what President Trump is going to do, the LNG sector is really well positioned. So you talk about green shoots and you're right, so a lot of the companies that did decide to go public last year priced well, they've traded better in the aftermarket. But David Solomon, a good standing member of his company, Goldman Sachs, he said the other day at a Cisco event, quote, 'It is not fun being a public company. Who would want to be a public company?' end quote, says CEO of a public company. Your response to David, why would anyone want to be a public company? It's not fun.
Well, to address the 'not fun' part, I think the next administration, this administration that got sworn in yesterday, is going to look at some of the reasons it's not fun. You know, the additional tax, if you will, on public companies, the additional disclosures. Now, no one is questioning the need for accurate financial disclosures, that's good, that's good table stakes. But there's been a variety of other regulations that have been layered on top of public company CEOs over time. So it does appear that this administration is going to look at that. Nothing really beats the liquidity and depth of the US public markets. That's the reason to go public.
Democratization of investor, yeah, right. But what it means is I think companies are probably going to stay private a bit longer and when they come to market, they're going to be better companies, better, higher quality companies that actually tap the public markets.
Do you feel you are, when I say you, the stock exchange and exchanges maybe even globally, are competing now with private capital in a way they never did? It used to be private capital, it was almost hand-in-hand. Private capital helped a company get to you. Now it seems like they're often stopping a company from getting to you.
I don't view them as competition. I still view the private markets as an important partner. A company when they're seeding an idea should not be a public company. They're still in startup phase, they're still investing in the next great initiative, the way to make the world better. And when you're in full-on investment mode in your business and trying to get your product to market and get critical mass of adoption for your product, it's probably not the greatest time to tap the public markets. You're very focused on building still. And I think private markets play an incredibly important role.
Do you feel, is there any concern, you know, the thinking used to be that one of the reasons that people like to buy into IPOs was because you were still buying into a big growth story. As an investor, you were buying into a growth story. That some of these companies, if they get so long in the tooth, that at least the rapid growth, all the benefit of that has gone to the private investors.
Or not all, but a lot more of that growth is now staying on the private side than the public. Because they are, look at a company like Reddit last year. Their IPO, their valuation at IPO day was $7.5 billion, it's now 30. They're a great example of a well-known household name. Viking Cruises, that was another great IPO last year. The more industrial sector, UL, the more tech sector, Rubrik with their cyber defense platform. These are companies that are new, hot startups, still have that great growth trajectory, still are on that hockey stick journey that the public can now participate in that hockey stick journey.
One other thing Solomon said, and then I won't keep talking about him. He was talking about what it took to bring a company public. He said the work of drafting an S-1 used to take a six-person team two weeks to complete for the banks, but now AI can do 95% of that in minutes. Cost, quote unquote, cost is one reason why companies often say we don't want to go public. Are the costs overall going to come down, including from the exchange, because AI and technology can do a lot of the work that people used to have to do?
I don't know how the cost, the cost will definitely be impacted, but I don't know how. Really, where you see the costs is that regulatory tax that I was talking about. And it's still early days, we're on day one basically of this next administration.
If Scott Bessent, the presumptive Treasury Secretary, came to you and said, 'Lynn, you get to be Queen for a Day, what's the one thing you want to do?' We can get this either through Congress or through regulation. What's the one thing you would want him to do?
I would want there to be a glide path for companies who are newer startup companies that have a path to the public markets that don't necessarily have the full-on tax of being a public company. Not financials, I think financial disclosure is incredibly important. I think an example, what's something you think that a company today has, if you look at some of the ESG, which I'm sure that's a regulation that'll be looked at, some of those forced disclosures, I think that's an area that'll probably be looked at.
We'd love to talk about AI. You obviously personally have a background in neural networks, that's kind, you're not a financier by trade or training originally. What is a tangible example of how the New York Stock Exchange is using AI internally?
We process three quarters of a trillion incoming order messages a day, buy, sell, and match trades come into our platform. We can't do that with humans, can't find enough humans to process that without using good technology. So we've been using AI from our regulatory team to spot nefarious behavior in our markets and then have that as an output to our humans to allow our humans to do higher value-add work as opposed to crunching, you know, here's a message, here's another message.
Do you think you're catching more than you would have caught four years ago?
