The 4 Hottest Upcoming IPOs to Watch

Advertisement

upcoming IPOs - The 4 Hottest Upcoming IPOs to Watch

Source: Shutterstock

The U.S. stock market has made an impressive V-shape reversal from the lows in March 2020, when the pandemic fear crashed the market. As of today, the major stock indices are at new record highs. This momentum seems to be ideal for initial public offerings (IPOs) and investing in general. And despite the pandemic, there are plenty of upcoming IPOs to be excited about.

The Renaissance IPO ETF (NYSEARCA:IPO), an exchange-traded fund that exclusively tracks the IPO market in the USA has a year-to-date performance of about 50% as of Friday’s close. This has outperformed all three major U.S. stock indices in 2020, even the Nasdaq Composite Index with the best performance among S&P 500 and Dow Jones Industrial Average. As the best-performing major index, the Nasdaq is up more than 28% so far in 2020.

With this investment euphoria here are four hottest upcoming IPOs to watch in 2020:

  • Airbnb
  • Robinhood
  • Instacart
  • Wish

Upcoming IPOs: Airbnb

According to the Wall Street Journal, Airbnb going public would “underscore a surprising rebound for the home-sharing giant and the IPO market.”

The long-awaited IPO was finally announced confidentially earlier this month. And while the company did not say when it plans to go public, it could be as early as the end of the year.

Many expect that Airbnb will be the blockbuster IPO in 2020. We do not know if this will be the case, but it’s still likely the ongoing novel coronavirus pandemic will delay any plans for an IPO this year.

The company that has changed the vacation rental industry, and potentially the housing market, could be well-positioned to file for its IPO later this year, especially if a Covid-19 vaccine is announced. Short of that, a decline of the virus globally could bolster the IPOs’ prospects. I agree with the New York Times post on Airbnb that “the company must now convince investors that it can thrive and turn a profit in a new era of limited travel.”

Robinhood

Robinhood disrupted the online trading industry offering zero-fee trades, is on the  CNBC’s 2020 Disruptor 50 list, and has witnessed traction and growth as its users went from only one million to 10 million since 2016. As another financial app to offer a complete suite of online trading and investing solutions, it faces competition from the well-established financial brokerages. Yet Robinhood is growing like a weed. An article on Fortune mentions that a new funding round of $200 million “values the startup at $11.2 billion—a significant jump from the $8.6 billion valuation it received last month when it raised $320 million.”

It is worth mentioning that Robinhood has been criticized recently because its users, mostly millennials, were behind the speculative pushing of stocks. Consider the rise of Kodak (NYSE:KODK), which went from about $2.10 to about $33 in July 2020, only to collapse back to $6 as of Friday’s close.

But this is not something to criticize, as the stock market is prone to these moves. What matters are the dynamics, the profitability and user growth of the company in the coming months and years.

Upcoming IPOs: Instacart

Instacart is another company that could see the pandemic boosting its business, as grocery delivery and pick-up services have been in high demand.

With the ability to deliver groceries within even an hour, Instacart promises users the value proposition of saving time and money. That’s put it in good shape while other businesses struggled. According to SharesPost  “Instacart last raised $225 million in June 2020 at a post-money valuation of $13.7 billion.”

The total funding to date is $2.17 billion. And what is one thing investors want to see in IPOs? Growth.

According to 24/7 Wall St., “The growth of Instacart has been very impressive. The company now claims to have its service coverage area to over 85% of all U.S. households and is now in all 50 states. It also claims to have over 70% of Canadian households in its service coverage areas.”

Apoorva Mehta, CEO of Instacart, previously hinted that an Instacart IPO would be coming soon. With everything the company has going for it, it’s more likely than ever that the time comes sooner rather than later.

Wish

Can an online e-commerce company focus on one niche market, unbranded, with inexpensive items and still thrive? Can shopping be fun? Wish is a direct-to-consumer application for manufactures based in China, that has been very popular in both Europe and the U.S. And the low prices segment of products can be appealing to a lot of customers worldwide.

However, Wish is primarily a portal to China’s markets. If the U.S.-China trade tensions improve, then the timing for Wish to go public will be even more positive.

According to SharesPost, some notable facts are that “[Wish] has raised $1.8 billion in Venture Capital funding from investors including Formation 8, Third Point Ventures, GGV Capital, Raptor Group, Legend Capital, IDG Capital, DST Global, 8VC, and Vika Ventures. Per company press releases, Wish last raised $300 million in August 2019 at a post-money valuation of $11.2 billion.”

All these four upcoming IPOs should be on your watch list if you are interested in investing in nascent companies.

Meanwhile, the coronavirus crisis has changed or deferred the plans of these companies to go public, but chances are that sooner or later they could provide more information and decide to make the big step and join the U.S. stock market. Stay tuned.

On the date of publication, Stavros Georgiadis did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.


Article printed from InvestorPlace Media, https://investorplace.com/2020/08/hottest-upcoming-ipos-to-watch-instacart-airbnb/.

©2024 InvestorPlace Media, LLC