The S&P 500 broad market index has performed extremely well in 2019. Gaining almost 30% last year, it was the strongest performance since 2013. In 2013 the market gained about the same sub 30% return from the previous year. If you were to find a similar performance earlier than that, you would have to go back to 1997. In 1997 the market rose just a few percentage points above 30% compared to the previous year. Despite the extraordinary performance in the broad market, the IPO performance did lag this year. Some well looked after companies such as Uber or Lyft saw their shares plummet significantly. However, some smaller companies have been able to post significant gains after their IPO.
With 2020 now underway, a new wave of companies is planning to go public this year, hopefully, with more success than last year. Some of these companies have already filed their forms with the US Securities and Exchange Commission (SEC). Others have already filed confidential data with the SEC for their IPO’s. And yet others, so-called unicorn companies (with a private market valuation of over $1 billion) are highly anticipated to come public soon.
2019 has seen the number of IPO’s actually decline from the previous year. In 2018 there were 192 IPO’s versus 159 IPO’s recorded in 2019. Stock market investors want to see more companies going public.
In this article, we are going to take a look at the top 10 most anticipated IPO’s for 2020. These will involve long-anticipated IPO’s of companies such as Airbnb, Robinhood, and others that have been planning on going public for some time now. Hence, it is not a list of companies that are going public this year, but rather of the hottest firms that investors would like to see going public.
Airbnb is an online marketplace that connects people who want to rent out their homes with people who are looking for accommodations in that location. Currently, it covers more than 100,000 cities and 191 countries worldwide. The strength of the Airbnb business model lies in its competitive pricing, the unique user experience, and its huge global presence. Investors have long been asking for the company to go public, and in 2019 Airbnb finally announced it was planning an IPO in 2020.
While 2019 figures are still highly anticipated, in 2018 and 2017 Airbnb posted a profit. During the early years, the company reported healthy growth rates of 150% to 300%. In 2013, nearly 250,000 properties were added to Airbnb. Since then, its revenue started growing at an incredible pace. It recorded a 1000% growth in revenues between 2013 when it was $250 million, and 2017, when it reached $2.6 billion. However, despite its impressive growth, the company faces some uncertainty. Inside turnover and lawsuits have been something the company was battling for a few years now.
The company was reportedly valued at $32 billion in 2017. During the second quarter of 2019, the company said it had generated “substantially more than $1 billion” in revenues. It has also expanded with experiences and boutique hotels. It also added to its “most wish-listed homes” that you can rent around the world.
Airbnb’s biggest home-sharing competitors are HomeAway, VacayHero, and HouseTrip. However, Airbnb’s presence outweighs any of these companies, and none of them have released an initial public offering. While there are many similarities between Airbnb and other companies offering home-sharing services, it remains the frontrunner in the market. In total it has 53 investors, of which 12 are lead investors and from which it has raised $4.4 billion in funding.
Robinhood is an online company that offers brokerage services to its clients. Primarily, this is done via the Robinhood app. The company has been around since 2013. However, it has started making headlines only in recent years. Robinhood was one of the first brokers to offer a zero-fee trade policy to its customers. As a result, many have flocked to use the company’s services. Additionally, many other brokerages have followed suit with the zero-fee trade policy.
The company has seen tremendous growth in the last few years. In the summer of 2018, the company reportedly had around 4 million users. By the end of the year, this number has jumped by 50%, to 6 million users. While currently, according to Forbes, the company has over 10 million users. In the summer of 2019, Robinhood received additional financing for its business operations. That put its valuation to around $7-$8 billion dollars.
The company is still to file with the SEC to show their concrete intent of going public. However, there has been lots of talk on Wall Street about what the future of this company could hold. One of the larger specifics of the company is that its user base is mostly the members of the younger generation. That is, the Millenials. Hence, it is logical that the company will have to find ways to keep attracting them. That said, however, many brokers have also adopted a zero-fee trade policy, and it is going to be not easy to do that amongst all the competition.
Founded in 2011, Postmates is an on-demand delivery company. Postmates employs couriers to pick up and deliver products from a variety of businesses. They range from the likes of restaurants, convenience stores, retail stores, and more. Through an online Postmates app, folks can get anything from food, clothes to even tech products delivered to their doorstep from local stores if that business is a partner with Postmates.
Since its launch, Postmates has become incredibly popular. It makes well over 5 million deliveries per month and has a presence in 3,500 cities across all 50 U.S. states. Postmates also reported that it currently works with over 500,000 restaurants as well as companies such as Apple, Wallmart, and others. This has translated into a big boost in revenues. Postmates’ revenue was $400 million in 2018, up 60% from 2017’s $250 million.
The company has raised a little over $681 million from companies like Blackrock, Spark Capital, Tiger Global, Harmony Partners, Founders Fund, and GPI Capital. Celebrities such as Kevin Durant have also taken an interest in Postmates. He reportedly invested $1 million into the company and even helped promote it. These investments helped propel the valuation of the company to $2.4 billion. Once the firm goes public, it could soar even higher.
The company expected to go public in 2019. However, due to choppy market conditions, and a hostile environment for growth-focused companies, it called off their plan to go public. However, the company still has these plans at hand, whenever they see the market conditions get better.
A big uncertainty for investors should be Amazon, which has taken the delivery service sector by storm. Companies such as FedEx have already felt the impact on their bottom like.
#4 Ant Financial
Ant Financial Services Group, formerly known as Alipay, is an affiliate company of the Chinese Alibaba Group. Ant Financial is the highest valued FinTech company in the world. It is also the world’s most valuable unicorn company with a valuation of $150 billion. Ant Financial operates Alipay, the world’s largest mobile and online payments platform. Additionally, it provides online investments and other related services to hundreds of millions of consumers. As of recent, the company now plans to sell in-house expertise to the same banks and help them digitalize their operations with tools such as cloud computing and data analytics.
As of the current moment, the company has not revealed any plans of going public just yet. However, investors have been buzzing about the company for quite some time now. One of the largest attractions to the company is its mobile payments platform that operates within China. It seems unrealistic that any US company could break into China’s mobile payments industry. At the same time, this company would offer a vehicle for that type of investment, which makes it so exciting for U.S. investors.
WeWork was one of the most anticipated stocks in 2019. Having announced its plans for IPO in 2019, it later formally filed a request to withdraw its registration statement with the SEC. In other words, it no longer plans on going public. The reasons for the turnaround were simple. Bad press basically plagued the company. Analysts have cut its valuation over the course of 2019. In addition, there even was speculation that the company could run out of money. With all of this going on, the company decided to wait for better times. Whether these will come soon, we are about to see. However, that does not take away from the fact that WeWork is still one of the most anticipated IPO’s.
The company basically rents out co-working office spaces for startups, freelancers and enterprises. It does that in some of the most expensive markets out there. WeWork makes its money through rent or membership payments that these companies and individuals make.
Founded in 2010, the company has expanded significantly over the last decade. In its recent SEC filings, the company boasted around 528 locations in 111 cities across 29 countries. It had almost 40% of the enterprises in the Global Fortune 500.
Soon after the announcement of the company going public, one brokerage house valued the company at $100 billion. Whereas by the time the company has changed its mind, some estimates were as low as $10 billion. However, regardless of its underlying troubles, the company might still have to raise capital via an IPO.
Snowflake Inc is a cloud-based data-warehousing startup that was founded in 2012. Snowflake offers cloud-based data storage and analytics service. It allows corporate users to store and analyze data using cloud-based hardware and software. Its Snowflake Data Exchange allows customers to discover, exchange and securely share data.
Snowflake has enjoyed continued growth in the last 12 months. Revenues were up 237%, employee count doubled to 1,400, and Snowflake quadrupled the number of new customers bringing its total to about 2,400. In October 2018, Snowflake raised another $450 million valuing the company at almost $4 billion. The company is said to be taking business from competitors such as Teradata and IBM. Despite fierce competition from them and giants such as Amazon and Microsoft in the field, the company is able to grow significantly.
The data warehousing market is growing at around 8.2% annually, according to Allied Market Research. Its 2023 market size is forecasted to be at around $35 billion. With this amount of growth and competitive advantage, Snowflake is expected to take a big piece of the pie. Additionally, investors should follow public companies such as Teradata for insights into how well an IPO could perform from Snowflake. Teradata’s stock is down 65% from its August 2012 high.
All this, however, does not rule out the possibility of an acquisition by one of the cloud giants, such as Amazon. Moreover, going public was not Snowflake’s main goal as of recent. According to them, they have no plans of going public at least until the summer of 2020. However, even after the summer, US presidential elections are going to cause quite some turmoil and uncertainty in the markets. Hence, while it is possible, and highly anticipated, do not bet that the company is absolutely going to have an IPO in 2020.
Casper is a company that operates within the so-called sleep economy or the sleeping mattress business. It produces mattresses for various situations, such as home, travel, and even for pets. The company has recently announced its plans to go public and has filed its prospectus with the SEC. Based on the most recent numbers, this IPO will likely test the appetite of investors for loss-making companies. Within the first 9 months of 2018 and 2019, in both years, the company has made about a similar loss of around $65 million.
Casper identifies with being in what they call the sleep economy. They value this market in the US at around $79 billion. Whereas globally, it’s worth around $432 billion, according to Casper. The company sees a growth rate of around 3.6% in the US within the next 5 years. Whereas in the rest of the world, it sees a much faster growth, at around 6.8% per annum. Such growth would bring the current value of the market in the US to $95 billion. Whereas in the rest of the world – from $353 billion to $490 billion. This would bring the total market value globally in 2024 to a whopping $585 billion.
While these forecasts are rather optimistic, they are an important part of the company valuation. Casper mainly operates within the US, Canada, and Europe and still has a lot of room for growth. Wellness is becoming more and more recognized as a priority for people and folks, in general, tend to invest in their wellbeing more as time passes by.
The latest funding round values Casper at around $1.1 billion, and the management wants a valuation of at least $1 billion.
Palantir Technologies is a private American software company that specializes in big data analytics. It was founded in 2003 and has been operating for more than a decade now. According to Bloomberg, Palantir generated nearly $1 billion in revenue in 2018 from its clients. The company’s customers range from global banks to the U.S. government and the Central Intelligence Agency.
In 2013 Palantir said it had no plans to go public and is generally a rather secretive company that does not disclose much. However, in recent interviews talks of an IPO have become increasingly common. Palantir was valued at roughly $20 billion in its last private fundraising round in 2015. The company targets a valuation of at least $26 billion, according to CEO Peter Thiel. Palantir has raised roughly $2.75 billion from investors to date, according to data provider PitchBook.
In 2017 the company reported a revenue of $600 million, whereas in 2018 it was around $880. That is a growth rate of almost 50%. If the firm grows as much in 2019 as it did in 2018, Palantir would wind up with a revenue of $1.30 billion throughout 2019. In general, data is becoming increasingly utilized by companies, and it is increasing in size every year. Just how much? Well, worldwide data is expected to hit 175 zettabytes by 2025, representing a 61% growth rate per year on average. The sky is the limit for this company, bearing in mind the possibilities that big data can bring.
#9 Didi Chuxing
Didi Chuxing was founded in 2012. It is another Chinese company worthy of investors’ attention. It basically operates the same industry as Uber does, however it operates in China. Hence it is often called the “Uber of China”. In fact, Didi Chuxing acquired Uber’s China business in 2016 for $35 billion.
The company had plans to go public in 2019, however, with the likes of Uber and Lyft seeing their share prices plummet after their IPO’s came out, Didi Chuxing decided to not pull the trigger and wait for better times for the ride hailing industry. According to them, the whole IPO industry as a whole has been deeply affected by the poor performance of Uber and Lyft, as other similar companies saw their perceived values and valuations fall. Didi Chuxing is targeting a valuation of at least $80 billion.
Didi Chuxing is not without competition in China. Auto Navi (owned by Alibaba) and local player Meituan Dianping both have the great local market expertise and can compete with Didi. Moreover, both of these players are offering deep discounts in order to gain market share, and this can greatly affect Didi Chuxing’s market share in China.
GitLab is a web platform for hosting project source codes. Founded in 2011 by two Ukrainians, the software company has seen tremendous growth in its client base and revenues in the past few years. Since then, the company has expanded rapidly and now has millions of users, 10,000 paying customers, and 900 team members. Their clients are large well-known companies such as Nvidia, IBM, Delta, and many others. At Goldman Sachs, for example, more than 7,500 people use GitLab on a daily basis.
In 2018 the company was valued at around $1.1 billion, after a round of funding. However, in 2019, the latest funding round valued the company at $2.75 billion. And it is no surprise – the company has been growing tremendously in the past year alone. Its annualized revenue is growing at a rate of 143% year-to-year, which is an incredibly high growth rate. In 2019 alone, the company has also doubled its customer count from 5k to 10k.
The company even has a section on its website that outlines a 3-year strategy. Front and center is GitLab’s IPO goal date: Wednesday, November 18, 2020. Believe it or not, the company itself plans to go public until this date.
In this article, we have picked our top 10 most anticipated IPO’s for 2020. Some of the companies already have plans of going public in 2020. Others are still undecided about the timing of the IPO due to market conditions. Yet whereas others have cancelled their plans to go public, however, the market still expects and wants them to go public and get their hands on those shares.
The performance of an IPO is notoriously hard to predict. As well documented, the average performance of an IPO lags the performance of the general market. However, despite this fact, investors are still lured by the big potential such events offer.
It is wise to prepare for an IPO in a major way before you invest in it or trade it. Be sure to read through the company IPO prospectus thoroughly. Also, try to dig deeper and find any useful information you can on the company from outside sources. Analyst opinions are hard to find on private companies, so you will have to count on your own’s. For more tips on how to prepare for an IPO, be sure to read our previous article.
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