The market for initial public offerings (IPOs) remains challenged. Several high profile IPOs carried out earlier this autumn have fizzled, including for German shoemaker Birkenstock (NYSE:BIRK) and British chipmaker Arm Holdings (NASDAQ:ARM). According to data from privately held investment bank Renaissance Capital, a total of 96 IPOs have raised $18.8 billion collectively this year. This followed 2022’s record-breaking the worst year for new stocks in decades, which raised only $7.7 billion. For context, about $50 billion of capital is raised through IPOs in a typical year.
So how will the IPO market fare in 2024? It’s hard to tell. However, if market conditions and investor sentiment improve, then Wall Street analysts think we could see several high-profile listings in 2024.
Without further ado, here is IPO watch: the three hottest new stocks to watch for in 2024.
Stripe
An IPO from Irish e-commerce company Stripe has been on many people’s radar for years. With a valuation of $50 billion, Stripe is cited as the most valuable privately held technology concern in the world. The company is co-headquartered in San Francisco and Dublin, Ireland.
Stripe develops software for payment processing on e-commerce websites and mobile applications. And it’s talked about going public for years. It’s even gone so far as to hire a law firm to help with the process. However, on several occasions, Stripe has put its IPO on hold saying market conditions weren’t right. While the IPO market has deteriorated, the financial technology and e-commerce space in which Stripe operates has also sunk.
Recently, there have been rumors that the company is considering a direct listing rather than a traditional IPO process. However it happens, Stripe’s market debut could happen in 2024 if market conditions improve and the fintech space rebounds.
Databricks
Valued at $43 billion as recently as this September, artificial intelligence and data company Databricks is one of the most hotly-anticipated IPOs of 2024. Additing to their credibility, the company also counts red hot AI chipmaker Nvidia (NASDAQ:NVDA) as an early investor.
Founded in 2013, Databricks has developed fierce loyalty among the open-source community. In an earnings report early this year, the company reported revenue of more than $1 billion.
Databricks is currently the largest IPO “unicorn,” which refers to a private company that’s valued at $1 billion or more. Investors are keen to get their hands on shares of Databricks, not only because of its high valuation and sales, but also because the cloud-based software and data storage company is well-positioned to benefit from the A.I. tidal wave that is enveloping the tech world. While an IPO date has not been set, Databricks is expected to go public in 2024, especially if the current market rally continues.
Social media company Reddit is another tech concern that is well-known and whose IPO has been hotly anticipated for years. The social news aggregation, content rating, and discussion board site saw its popularity skyrocket during the pandemic as people sheltering in place at home used it to discuss topics ranging from stocks to stamp collections, and everything in-between. Like Stripe, Reddit has been waiting for the ideal time to hold its IPO.
The company filed confidentially to go public in December 2021, but its timing couldn’t have been worse, coming as it did weeks after markets peaked and began to a steep downturn. But Reddit hasn’t given up on its plans to go public, and 2024 could be the year it finally happens.
Today, Reddit boasts more than 50 million daily users and has a valuation of about $15 billion. Given investor interest in social media stocks, Reddit can be expected to be a stock to watch for in the New Year.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
