As of the end of the third quarter, there have been a total of 1,635 initial public offerings (IPOs) that raked in $330.7 billion, a year-over-year (YOY) increase of 99%. This year’s global IPO activity has already surpassed that of 2020 by both deal numbers and proceeds. It is a welcome return to form, since last year was all about special purpose acquisition companies (SPACs), also known as “blank-check companies.”
Most recently, NerdWallet (NASDAQ:NRDS) saw a fantastic debut. Shares skyrocketed 91% in IPO debut, giving the personal finance website a market cap of $2 billion. Other major IPOs this year include GitLab (NASDAQ:GTLB), Amplitude (NASDAQ:AMPL) and Toast (NYSE:TOST).
However, it’s important to note that not all IPOs are successful. Many companies tend to dip sharply once the initial enthusiasm wears off. So, take caution when investing in this space.
It is vital to do your homework before committing capital to any enterprise. Valuations, business fundamentals and the industry are just some of the factors you need to watch when judging an IPO.
Underneath it all, each prospectus is telling you a story. If you believe in that company’s story, then it will make the most sense to invest your hard-earned capital in it.
In this article, we will consider these factors and more with these 10 upcoming IPOs expected to debut sometime in the next year:
- Impossible Foods
- Rivian Automotive
- iFIT Health & Fitness
- The Fresh Market
IPOs to Watch: Stripe
At a valuation of $95 billion, Stripe is the most eagerly-awaited IPO at the moment. Citing anonymous sources, the Wall Street Journal said the company reported around $7.4 billion in revenue for 2020.
When Stripe started, it provided services to other startups, such as DoorDash (NYSE:DASH), that were ignored by banks. As these startups grew, so did Stripe, proving the company had a great business strategy.
The company grew quietly but quickly, processing hundreds of billions of dollars for millions of businesses worldwide by the end of 2019. Stripe now counts heavyweights, including Amazon (NASDAQ:AMZN), among its customers.
The rise of e-commerce is a secular trend, so the performance was not surprising. However, the pandemic made it even more popular, and several companies such as Stripe benefited massively as a result. The company’s investments in artificial intelligence (AI) and machine-learning models helped them take on new businesses with ease.
At the moment, there is no firm date for an IPO. Stripe could still end up going public at the end of the year. However, it is more likely we will see its debut in 2022.
The finance chief of Stripe, Dhivya Suryadevara, remains tight-lipped on whether or not the company is planning an IPO for this year. However, she had been tasked with improving the company’s financial infrastructure by the end of 2021 — an effort known as Project River.
As the world’s most popular data engineering tool, Databricks provides the power and flexibility to process large volumes of structured or unstructured information with ease.
With the rise of data in business, many companies are jumping on board by making use of AI and visualization tool services. Databricks has become an industry leader by providing sophisticated services that help companies manage databases, implement AI and visualize data.
That’s a lot to take in, but Databricks is on track for serious growth. Companies in several countries are doing business with this organization, and it expects revenue to increase by more than 75% next year to reach $1 billion in 2022.
The company recently held a fundraising round that attracted $1.6 billion for a $38 billion valuation. Those funds were added to the $1 billion the company raised in February.
Databricks takes advantage of Amazon Web Services (AWS) to store and process data. This means clients don’t need to copy their raw input into its software to be analyzed; instead, they can use the same system where it currently resides — such as AWS’ S3 object storage service or Microsoft’s (NASDAQ:MSFT) HDInsight platform.
As of this writing, we have no firm date for the IPO. However, considering the success of the company, it will likely be sooner rather than later.
IPOs to Watch: Discord
Discord is a chat app that is extremely popular with gamers, sporting more than 150 million active monthly users worldwide. Members can communicate in real-time via voice calls or video chats, share media files and talk to others on their server.
Discord had modest origins. Founders Jason Citron and Stan Vishnevskiy wanted a better communications tool to connect with their remote developer teams. They came up with a solution to chat with their team members, which eventually became Discord.
Last year, the company was in talks for a potential $10 billion acquisition by Microsoft (NASDAQ:MSFT). However, that deal fell through. Now analysts are expecting a public debut somewhere in 2022.
Nevertheless, the company is flush with cash, and its most recent funding round gives them enough to look into the markets at its leisure. It raised $500 million in September 2021, giving it a valuation of $15 billion.
Impossible Foods replaces meat products with plant-based alternatives. The goal is to give people the taste and nutritional benefits without any negative health or environmental impacts.
The company was founded by Stanford professor Pat Brown and its products have taken off in both home cooking and American restaurants. It could be open for investment sometime in 2022 as it becomes more common on menus across the country.
A substantial amount of people are switching to Impossible Foods’ offerings because they want a meat-free lifestyle. These plant-based wonders have been proven by scientists, chefs and dieticians across the globe to have some health benefits while helping save our planet from destruction.
A recent Bloomberg article, citing anonymous sources, said the plant-based meat producer is eyeing a capital raise of $500 million to give it a market cap of $7 billion.
Since starting in 2011, Impossible has raked in $1.5 billion. Reuters recently reported the company is planning a public listing. According to the report, the El Segundo, California-based company is seeking a valuation of $10 billion.
Speaking to Forbes’ Chloe Sorvino, founder and CEO Pat Brown confirmed listing plans but did not date. “At some point, we will go public,” Brown stated, “but not any specified time in the future.”
IPOs to Watch: InstaCart
InstaCart has made it possible to order groceries online and have them delivered when and where you want. Its latest funding round puts the online grocer’s valuation at $39 billion.
In 2020, Americans stayed home in greater numbers than they had for decades, which helped increase the demand for delivered groceries. In this environment, InstaCart thrived.
The company has been working with Goldman Sachs since last year on a direct listing. The IPO is expected in 2022, but there’s no word on when the filing will occur. Given that it’s already November, it seems the listing will not take place this year.
One of the top services in its field in North America, InstaCart delivers products from more than 600 national and regional retailers. It serves more than 85% of U.S households as well as 80% of those in Canada.
On the leadership front, Fidji Simo is still relatively new as CEO. She assumed her duties in August. Simo previously worked with Facebook (NASDAQ:FB) when the social media giant went public.
With Simo’s IPO experience plus the large reach of the company, InstaCart is likely to become one of the biggest IPOs of all time.
Long the subject of IPO rumors, Amazon-backed electric pickup truck company Rivian is finally making its public debut official. The startup has applied to trade on the Nasdaq exchange as RIVN.
Rivian Automotive recently increased the expected offer price in hopes of getting a valuation of $65 billion, according to the IPO documents.
Its R1T, a truck with all-electric capabilities and luxurious features, has been met by rave reviews from customers since its launch in September. The vehicle’s competitors, such as Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM), have yet to ship anything similar on the market.
Two years ago, Amazon announced it will be purchasing 100,000 electric delivery vans from this startup. Meanwhile, Ford Motor Company (NYSE:F) owns a 5% stake in Rivian.
After the success of Tesla, electric car stocks are on a tear and poised to take off in the coming years. Against this backdrop, it makes sense why Rivian is doing so well and will continue to progress.
IPOs to Watch: Klarna
It seems like every major retailer has a payment solution for online shopping. But what happens when you need to purchase with your credit card or PayPal account? The answer is Klarna’s buy now, pay later (BNPL) method.
Credit cards have been around for decades. However, combining this into the transaction process on an e-commerce store is a significant innovation.
For Klarna, Covid-19 was a massive tailwind. The number of sites installed with Klarna jumped to 250,000 within a year. Now it’s considering an IPO and hoping this significant increase will allow them to capitalize on its success.
Despite the rumors of an impending Klarna IPO, CEO Sebastian Siemiatkowski recently shared his concerns with CNBC. He explained how this turbulent market might affect the company’s potential public offering.
“The volatility in the market right now makes me nervous to IPO to be honest,” Siemiatkowski told the news outlet at the London Tech Week gathering. “I think it would be nice to IPO when it’s a little bit more sound. And right now it doesn’t feel really sound out there.”
Klarna’s more calculated strategy toward its IPO is encouraging for investors who see it as a potential long-term buy. The payments firm is waiting out a situation that could still arise from the drama surrounding embattled Chinese property developer, Evergrande (OTCMKTS:EGRNF). By doing so, it could capitalize on better conditions than other companies might have faced when going public.
iFIT Health & Fitness
Most companies gearing up for an IPO are relative newcomers. However, iFit traces its roots back to the 1970s. Although it started as an Asian kitchen and tableware importer, it slowly pivoted into fitness equipment like treadmills and exercise bikes and never looked back.
For the year ended May 31, the health and fitness company ended up with more than $1.7 billion in sales. A large reason for the company’s success is its products like NordicTrack and ProForm.
The company offers services including a wearable fitness tracker. The system can help improve your exercise regimen by providing more tailored workouts using biometric data.
However, the recent market volatility has stockholders worried about their investments. That is why iFit recently delayed its IPO, citing adverse market conditions.
Considering the problems enveloping Evergrande, inflation fears and potential interest rate hikes, the move makes sense. However, once the dust clears, this is one of the best IPOs to watch out for in the coming year.
IPOs to Watch: The Fresh Market
Sometimes the term IPO can be a bit misleading. Case in point, The Fresh Market is gearing up for a second lease on life after initially debuting in 2010.
In 2016, private equity giant Apollo Global Management (NYSE:APO) helped the organic grocer go private for $1.36 billion. At that time, it could not contend with big-name grocers. But since going private, the company has steadily built up its base and is now in a much better position to compete.
The timing of its second IPO could not be better. Last year, same-store sales grew by approximately 22% due to pandemic-related catalysts. The Fresh Market submitted an S-1 registration statement for IPO on July 16.
For now, the company has not yet announced an official IPO date. However, it could debut next year on the Nasdaq exchange under the ticker TFM.
Our final entry on this list of IPOs is ThoughtSpot, a company specializing in technology and analytics to discover hidden insights from large volumes of data. Despite the company’s recent financials being unavailable for investors, its most recent publicly-reported revenue saw its top-line grow from 108% in 2019 to 88%.
Cloud products now represent half of its annual recurring revenue. ThoughtSpot’s cloud services have seen 250% growth in one year, and 85% of new customers purchased these products during those 12 months.
Co-founder Ajeet Singh heads the company. It is not his first foray into the space. He previously founded Nutanix (NASDAQ:NTNX), a cloud computing and technology infrastructure company.
Although we do not know when the IPO will occur, CEO Sudheesh Nair recently said that he’d like to “put a few more quarters behind [ThoughtSpot] to show predictability.”
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.