As 2014 comes to a close, it’s time to ask ourselves: What will next year look like? Specifically for this space — what will the slate of 2015 IPOs look like?
After all, 2014 was a robust year for the IPO market. GoPro Inc (GPRO) took off like a rocket ship from the get-go. Zoe’s Kitchen Inc (ZOES) hit the Street as the fast-casual industry was heating up. And Alibaba Group Holding Ltd (BABA) went down as the biggest initial public offering ever.
There were some duds, too, of course. King Digital Entertainment PLC (KING), the developer behind the hit mobile game Candy Crush Saga, has seen its stock fall nearly 30% from its IPO in March. Similarly, Viggle Inc (VGGL), an application that rewards users for checking in when they watch TV, hasn’t done so well, with shares off a whopping 60% from their late April IPO.
Still, IPOs, while risky, are great for generating excitement and quick profits. Just last week, peer-to-peer lender LendingClub Corp. (LC) soared 63% on its first day of trading, so it doesn’t look like the IPO market should lose much momentum heading into 2015.
So what’s on deck? Of a host of companies that could make their public debuts next year, here are five home-run IPOs to watch for in 2015.
2015 IPO Candidate: Airbnb
Reputed Valuation: $13 billion
Airbnb, a website that connects individual renters and letters, is one of the hottest private companies in Silicon Valley. Airbnb was valued at $10 billion in April — and just a few months later in October, a fundraising put the company’s valuation at $13 billion.
Peter Thiel, the billionaire co-founder of PayPal and a vociferous libertarian, thinks Airbnb’s best days are ahead of it, raving to Business Insider in September about the company’s prospects:
“Of the consumer internet businesses in Silicon Valley, the one I’m probably the most bullish on is Airbnb. So I think that definitely has the potential to become the next $100 billion consumer internet business.”
For the individual investor’s sake, let’s hope he’s right and that we see an Airbnb IPO in 2015.
2015 IPO Candidate: Xiaomi
Reputed Valuation: $40 billion to $50 billion
You may have never heard of Xiaomi, but like Alibaba, it’s a fast-growing tech company from China that you won’t be able to ignore for long. Since launching its first smartphone in 2011, Xiaomi’s popularity has skyrocketed, and the company is now the third-largest smartphone supplier in the world.
Customers are attracted to Xiaomi’s extremely low price points, which derive from its online selling strategy, the shunning of expensive traditional marketing and a willingness to keep selling old models as technology develops and the same inputs become cheaper.
But the real differentiator for Xiaomi is its wildly popular custom Android operating system, through which it sells apps, games, themes and the like. With chip provider Qualcomm (QCOM) backing it as an early investor in 2011, Xiaomi has the smart money behind it — and a pretty darn good relationship with its chip supplier.
There’s been talk of a Xiaomi IPO in 2015, so keep your eyes peeled for this dynamic high-growth name.
2015 IPO Candidate: Spotify
Reputed Valuation: At least $10 billion
Spotify, the streaming music service that has risen to become Pandora Media Inc’s (P) biggest rival, could be one of the top 2015 IPOs next year.
Like Pandora, most of Spotify’s users use the ad-supported, free version of the platform, but at least 10 million people pay the $9.99 monthly fee for Spotify Premium. That’s $1.2 billion in subscription fees annually.
While Spotify has an enviable revenue stream, it’s facing pushback from some big names in the music industry — Taylor Swift being the most high-profile example — who won’t authorize their music to be proffered through the service. And while Google Inc (GOOG) reportedly considered a deal to acquire Spotify earlier this year, it ultimately decided against the move, balking at the $10 billion price tag.
If Google’s attitude is indicative of the attitude the M&A world has toward Spotify, a 2015 IPO might be the best way for the company to get the valuation it wants.
2015 IPO Candidate: Box
Reputed valuation: $2.4 billion
We will almost certainly see a 2015 IPO from Box, the popular cloud storage and collaboration service.
Not to be confused with Dropbox, Box caters to a more corporate clientele, aspiring to be a go-to service in the world of enterprise.
Box filed for an IPO back in March, but delayed going public as a series of cloud storage companies were punished by the market. The good news for Box bulls is that the company is growing revenue at a blistering pace: Box amended its S-1 filing last week, and revenue in the first nine months of 2015 is up 80% from the same period last year; the company is on track to do $225 million in sales this year.
A Box IPO is only a matter of time, and unless something goes terribly wrong, that time should be next year.
2015 IPO Candidate: Uber
Reputed Valuation: $40 billion
Could we see a 2015 IPO for Uber, the ride-sharing service that’s taken the world by storm? Perhaps, but the company has some PR legwork to do before then. Uber was destroyed by the media in 2014, as the company was accused of tailing journalists, an exec suggested Uber pay $1 million to discredit media critics, and a driver in New Delhi was accused of rape.
Investors, however, seem to have an endless appetite for the disruptive Silicon Valley darling. Fueled by its wildly popular ride-hailing app, Uber reportedly hauled in $10 billion in revenue last year. With margins cited at 20%, the company may have netted as much as $2 billion last year.
While $10 billion in annual sales may sound like a mature company, Uber’s aggressive expansion efforts indicate there’s still plenty of room for growth. Venture capitalists agree, as its most recent $40 billion valuation was more than double the $18.2 billion valuation Uber garnered just 6 months ago.
A 2015 Uber IPO would likely be the hottest new issue of the year on Wall Street.
As of this writing John Divine was long shares of GOOG stock and GOOGL stock. You can follow him on Twitter at @divinebizkid.