What does it take to survive the deep freeze in the IPO market? Spoiler: A jacket won’t cut it, and a pretty pitch deck isn’t enough anymore — investors want profits. So, it’s no surprise that the hottest IPO of 2024 sits at the intersection of two of Wall Street’s favorite trends: AI and healthcare.

What’s in a name? Tempus AITEM

, a diagnostic healthcare firm using artificial intelligence to analyze lab results and create personalized cancer treatments, seemed to have all the right ingredients for a blockbuster IPO. Even with Google backing them, the stock stumbled upon going public — but the trading arena’s obsession with AI and personalized healthcare gave it a lifeline.

• After a lukewarm debut on June 14,TEM
  dropped 37% over the next eight trading days, wiping out much of its $6B listing valuation.
• But since then, the company has rallied 137% from its June lows, making it the best-performing IPO of the year (so far) — now up 47% from its listing price.

A Differential Diagnosis for the Rally

Before going public, Tempus had to raise $200M in emergency funding to avoid running out of cash — not exactly what prospective investors want to hear. The business remains deeply unprofitable — booking a $214M loss in 2022 and a $289M loss in 2023. However, rapid growth has investors hopeful that profits are on the horizon.

• Top line projections for 2024 are set to rise to $700M, a 32% year-over-year increase — mainly from lab tests and data licensing.
• JPMorgan expects this strong revenue growth to continue through 2027, with profitability anticipated by the second half of 2025 (Reuters).

AI this, AI that: When it comes to AI, it’s easy to get caught up in the hype. But investors should tread carefully — with companies throwing around the term “AI” left and right, these two letters should make your spidey senses tingle. An organization’s AI claims don’t always translate into real technical (or financial) gains. According to a regulatory filing, only 1% of Tempus’ total revenue came from AI, which the firm describes as “immaterial.” Yet, nearly three months after its debut, shares are trading just shy of $60, well above the $41 to $50 price target range set by institutions (TipRanks).