IPOs of small foreign companies, particularly those from Asia, have significantly declined in the US. This disappearance is largely attributed to heightened regulatory scrutiny from the SEC and the continued prevalence of pump-and-dump scams, which have tarnished investor confidence in these microcap listings. Bloomberg's analysis indicated that approximately $16 billion in market capitalization has vanished since 2023 from one-day or two-day crashes of new firms on Nasdaq's small listing tier showing pump-and-dump patterns. A quarter of over 250 companies that went public on Nasdaq's smallest tier since 2023 were promoted in WhatsApp group chats before crashing or being suspended by the SEC.
This trend is part of a broader realignment of capital formation in the US, where companies are increasingly opting to remain private. The number of private companies valued over $1 billion surged by 465% between 2017 and 2025, reaching 1,582, according to Bloomberg Intelligence. Companies are choosing to stay private longer due to rising disclosure burdens, litigation risks, and increased compliance costs associated with public listings. For instance, regulatory compliance costs for public companies have risen 18% since 2024, disproportionately affecting companies with valuations under $2 billion.
The overall IPO market in 2026 is tracking towards its lowest output since 2014, with issuance volume down 37% year-to-date by mid-July. The average IPO offering size has contracted by 22% since Q1 2025, and the number of completed deals has fallen 41%. Enhanced SEC disclosure requirements, particularly for technology companies (implemented in January 2026), have added 6-9 months to pre-IPO preparation timelines, covering detailed AI governance, cybersecurity, and ESG audit trails. Additionally, private equity dry powder has reached $2.86 trillion globally by Q2 2026, offering a much faster and less burdensome alternative to public markets.
Investment banks like Morgan Stanley note that 2026 IPO pricing ranges are typically 15-20% lower than comparable 2024 offerings due to lower demand elasticity among institutional investors. This confluence of factors—elevated regulatory scrutiny, persistently high borrowing costs, and shifting institutional capital allocation towards private structures—has created a new equilibrium where companies delay or cancel public offerings indefinitely, especially impacting smaller, foreign entities previously susceptible to manipulative trading schemes.
