Fiscal consequences of less CA’n corporate IPOs

The Daily Signal’s Arjun Singh analyzes California’s unprecedented decrease in number/value of initial public offerings (IPOs) in 2022. Though Gov. Newsom has praised so-called surpluses, Singh points out that less corporate activity (due to domestic migration) actually constrains CA’s tax revenue — and, ergo, public services.

California officials are sounding the alarm after recent statistics showing that less corporate and start-up activity in the state will lead to a decline in tax revenue, according to a report by Bloomberg News.

This year, just nine companies based in California have held initial public offerings, or IPOs, which is when a company first lists shares for sale on the stock market—considered a milestone in its growth after strong activity and high valuation, Bloomberg’s report revealed.

In 2021, California—whose start-up ecosystem in Silicon Valley is considered the most prodigious in the world—saw 81 companies conduct IPOs, making 2022 the year of a ninefold decrease.

Moreover, the value of these IPOs was far lower than in the past, raising $177 million, or 2% of the total amount raised by U.S. companies that went public in 2022. By contrast, in 2021, California’s share of the revenue generated by IPOs was 39%, by far the largest of any state.

Over the past few years, many companies have departed Democrat-run California for other states that are run by Republicans. Texas has been the top destination, gaining 44% of companies that left, according to a report by BuildRemote, a business consultancy. These include high-profile departures such as that of electric carmaker Tesla Inc., led by CEO Elon Musk, which moved its headquarters to Texas.

This article originally appeared in The Daily Signal. Read the whole thing here.

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