![The Top Upcoming IPOs To Watch The Top Upcoming IPOs To Watch](https://trangangolf.storage.googleapis.com/wp-content/uploads/2023/12/23150242/412962084_779100577563268_3371857793184435682_n.jpg)
Remember IPOs? A cavalcade of companies went public during the peak of the Covid-19 pandemic in 2020 and 2021 as the stock market soared, driven higher by the proliferation of cheap money and retail investors stuck at home with cash burning a hole in their bank accounts.
Big names, from Airbnb and Coinbase, to Palantir and Rivian, rode a wave of enthusiasm to impressive IPO debuts.
That optimism was turbocharged by retail investors piling into meme stocks and economists’ predictions that the good times would last as governments eased Covid-19 restrictions and shoppers returned to brick-and-mortar stores.
Unfortunately, the good times did not last. The firehose of IPOs dried up along with the easy money that fueled new offerings as the Federal Reserve began its campaign of interest rate hikes to beat down historically high levels of inflation.
“I don’t expect IPOs to rebound while interest rates remain high, amid quantitative tightening and uncertainty about the trajectory of interest rates,” says Jose Torres, senior economist at InteractiveBrokers.
Still, the struggles of IPOs in 2021 and 2022 should not surprise savvy investors who understood the bigger picture. Between 1975 and 2011, over 60% of newly public companies saw negative returns after five years.
When Will the IPO Market Return to Normal?
For now, institutional investors—who would buy blocks of stock in any IPO—remain reticent about plunging cash into IPOs at the prices IPO stock executives are demanding.
“I would say the IPO market will recover in late 2024,” Torres says.
Investors are afraid of the high cost of money due to Fed rate hikes, says Avi Deutsch, a managing director of wealth management firm Robertson Stephens. They’re wary because the central bank does not appear to be done increasing the cost of money. And they’re skittish that still-high inflation poses a risk to the business prospects of any company that would go public.
And that’s not all. Share prices of many companies that went public in recent years have fallen sharply. As a result, many investors have lost money on those deals.
“It left investors with a pretty bad taste in their mouths as far as the future of IPOs goes,” Deutsch says. In turn, that dynamic has made it harder for companies contemplating an IPO to get the share price they want.
“Since companies are not getting the wanted valuation, they are staying private,” says Deutsch.
But that standoff between companies wishing to go public and deep-pocketed investors is bound to end. Inevitably, more and more on both sides will find themselves seeing eye to eye. Supply and demand will reach equilibrium. The price for money that fledgling companies are willing to pay will match the returns investors expect.
“This is already happening slowly,” says Deutsch. “Companies will eventually run out of money. That will lead to them needing to fundraise. In my opinion, the market needs a fresh new private company to pique interest.”
The technology sector has been the most prolific source of IPOs over time. Will that continue? Renewable energy companies will be a big incubator of public offerings in the next IPO craze, Deutsch says.
What To Do When IPOs Proliferate
When the frequency of IPOs picks up from its current tortoise pace, make sure to allocate no more than a small percentage of your portfolio.
This rule applies to investing in any individual stock: Experts recommend that you avoid putting large percentages of your cash in any one company, no matter whether it’s a hot IPO name or has been listed on the New York Stock Exchange for a century.
Diversifying your dollars across many companies, via exchange-traded funds or index funds, helps position your money to grow without putting all of your eggs in any single company’s basket.
That being said, a small bet can win big if you back the right horse. Despite the strange economic climate we find ourselves in now, a few of the soon-to-be public companies will excel over the long haul. The trick is figuring out which ones.
Top Recent IPOs of 2023
Here are key facts about recent debuts on Nasdaq’s IPO calendar. You can get a prospectus at the SEC website or a company’s investor relations page.
Arm Holdings ADR IPO
- Ticker: ARM
- IPO Date: September 18, 2023
- Offering Price Per Share: $51
The debut of Arm Holdings, a prominent U.K. chip designer, was the biggest since 2021. After being priced at $51, Arm opened at $56.10. It rose as much as nearly 25% on its first day. Arm chips are widespread among consumer products, including smartphones and digital televisions. Its chips are also key components in artificial intelligence (AI), cloud computing and autonomous driving. Shares soared as high as $69 on September 15. But it has pulled back to the low $50s. An analyst for Bernstein wrote in a note to clients that Arm is expected to benefit from AI growth, but “we believe it is too soon to declare them an AI winner.”
Surf Air Mobility IPO
- Ticker: SRFM
- IPO Date: July 27, 2023
- Offering Price Per Share: $5
Surf Air Mobility is now trading on the NYSE. Surf Air is an electric aviation and regional air travel company. It intends to develop powertrain technology with commercial partners to electrify existing fleets. It fell 37% from its debut price in initial trading. Most recently, it has been trading at under $2.
Better.com IPO
- Ticker: BETR
- IPO Date: August 24, 2023
- Offering Price Per Share: $17.44
Known formally as Better Home & Finance, the online mortgage lender followed through with its long-delayed SPAC tie-up with Aurora Acquisition Corp. by debuting on the Nasdaq stock market—and plunging more than 90% almost immediately after the opening bell. The six-year-old company enjoyed strong growth during the Covid-19 pandemic, driven by surging demand and ultra-low mortgage rates. But it went public at a time of high rates and sinking home sales.
6 Top IPO Prospects of 2023—And Beyond
Headline-grabbing names make some of these companies the most talked-about IPO prospects. They provide a wide range of services, and many are uniquely positioned to thrive in the post-Covid economy.
Please note that the valuations listed below are estimates, and are generally based on previous rounds of venture capital funding or company projections. They will almost certainly change when the companies actually go public.
1. Stripe IPO
- Valuation: $50 billion
Life has been better for Stripe, a San Francisco-based payment processing giant. The company raised $6.5 billion from existing and new investors, it said in March 2023. At that time Stripe’s valuation was $50 billion—down nearly 50% from its peak valuation of $95 billion in March 2021.
The cash haul is not needed to fund operations. Instead, Stripe said it would be used for stock buybacks and to cover tax bills related to stock awards.
Many investors hoped that Stripe could be one of the biggest IPOs ever, thanks in large part to rising demand for e-commerce, which went into hyperdrive during the pandemic. Some investors remain highly bullish on a Stripe IPO despite its valuation reduction.
2. Klarna IPO
- Valuation: $6.7 billion
The Swedish buy-now-pay-later industry pioneer Klarna has seen its fortunes dim after raising $800 billion in funds in July 2022 at a valuation of $6.7 billion. That represents an 85% decline from a year prior, when private investors thought the company was worth almost $50 billion. That made it Europe’s most valuable startup.
Why has its valuation pulled back? There just isn’t that much demand now for companies that can’t turn profits and are burning through cash.
3. Chime IPO
- Valuation: $25 billion
Chime is a no-fee mobile banking platform. Technically speaking, Chime is not a bank but rather a fintech company that uses technology to automate and improve the delivery of financial services. Chime issues debit and credit cards through actual banks that it partners with.
Chime was valued at $1.5 billion in 2019. Its valuation reached $25 billion in the summer of 2021, amid the apex of investor interest in fintech startups. Chime was aiming for a valuation of $35 billion to $45 billion when investors saw it debuting in early 2022. But said it was putting an IPO on hold.
The problem? Jittery backers. Fintech funding around the world rose 55% quarter-over-quarter in Q1. But if you set aside Stripe’s stupendous $6.5 billion round, funding fell 12%, says CB Insights. The number of deals also dropped. It fell for the fourth straight quarter, landing at 983.
4. Databricks IPO
- Valuation: $43 billion
Big data has become a big obsession of companies operating in every industry. Databricks has become a leading purveyor of tools designed to simplify database management, implement AI and even just do great data visualization. In brief, the company is a cloud-based provider of AI powered data analytics.
Databricks was valued at $43 billion as of its most recent funding in September 2023. That was up from $33 billion in October 2022. The decrease reflected the tech industry trend of slashing valuation amid economic downturns.
Even as it postpones going public, the company is priming itself to be a major player in the AI data/cloud computing space. It’s developing its own AI to compete with the likes of ChatGPT. It recently signed a deal to take over Okera, an AI-centric data governance platform. Databricks is also beefing up its venture arm by investing in Immuta, a data security platform and software company.
5. Reddit IPO
- Valuation: $5.5 billion
Reddit’s IPO has been lingering in the face of a tech IPO bloodbath. It’ll likely wait for a better environment before pulling the trigger.
The company earned a valuation of $10 billion last August after raising more than $400 million in funding from Fidelity and others. But Fidelity Blue Chip Growth Fund (FBGRX) recently revalued its Reddit holding, down 7.36% from a prior disclosure. The update implies an overall valuation of $5.5 billion for Reddit.
Non-staff moderators of some popular sections of Reddit, including gaming and music, began protests on June 12 against the social network’s plan to start charging some developers for access to its data. The moderators have in effect locked out users. Reddit says it can no longer subsidize businesses that use lots of its data.
Still, Reddit is looking to go public later this year, Reuters said in February. The company wants to capitalize on its big online community of users dedicated to an endless array of interests. That bloc is the source of earlier exuberance for an IPO by the likes of Reddit.
6. Impossible Foods IPO
- Valuation: $7 billion
Impossible Foods is becoming a common sight in supermarkets and on menus in America’s biggest restaurants. Burger King patrons, for instance, can sup on the Impossible Whopper. White Castle patrons can dine on the Impossible Slider.
Impossible Foods hopes its plant-based burgers will win fans and reduce meat production in order to help save the climate from catastrophe. Potential investors, though, can only continue to salivate at the idea of an IPO.
In early 2023, CEO Peter McGuinness reportedly said it would happen, but probably not this year. The company is well capitalized, he said, “and it’s not a great macro environment to” go public.
How Recent IPOs Have Performed
Once the afterglow wears off, new public companies go about the hard work of churning out profits and developing new products and services. Here’s a quick recap of how well some recent high-profile IPOs have performed.
But IPOs can be fickle. Of the 100 most recent IPOs tracked by IPOScoop.com, keep in mind that 76 are flat to down since their debut. This is only to say that investing in recent IPOs can be an unpredictable enterprise, which is why experts generally recommend that you keep your portfolio well diversified.
Genelux IPO
- Ticker: GNLX
- IPO Date: January 26, 2023
- Return Since IPO: 312.5%
Genelux (GNLX) shares soared more than 300% through their October 3 compared to their late July offering price of $6, according to IPOScoop.com. Genelux is a clinical-stage biopharmaceutical company, which develops and commercializes next-generation treatments for a broad range of cancers.
Prestige Wealth IPO
- Ticker: PWM
- IPO Date: July 7, 2023
- Return Since IPO: -35%
Wealth manager and asset manager Prestige Wealth (PWN) has fallen 35% since going public at $5 a share in July. Now trading around $3, PWM’s “all-time” intraday high was $30.92 on July 10. Nearly 165-year-old Prestige targets clients with investable assets of $1 million or more.
Atlas Lithium IPO
- Ticker: ATLX
- IPO Date: January 10, 2023
- Return Since IPO: 408.5%
Atlas Lithium is a U.S. mineral exploration and mining company with properties in Brazil. It is among the largest seekers of lithium and other battery minerals in Brazil, which is one of the few countries to have hard-rock lithium, which generally cost less to extract than lithium chemical products from brine does. Atlas went public early in the year at $6 and lately has been trading above $30.
Structure Therapeutics IPO
- Ticker: GPCR
- IPO Date: February 3, 2023
- Return Since IPO: 277%
Structure Therapeutics, formerly known as ShoutTi, creates medicines by using advanced computational and structure-based technologies. Its oral therapeutics treat chronic metabolic and pulmonary diseases. It has operations in the U.S. and China. Its presence in China makes it potentially vulnerable to worsening trade relations between the U.S. and that nation.
Mobileye Global IPO
- Ticker: MBLY
- IPO Date: October 26, 2022
- Return Since IPO: 98%
Based in Israel, Mobileye Global (MBLY) debuted at $21 per share. The Israel-based business develops autonomous driving technologies and advanced driver-assistance systems. Those include cameras, computer chips and software.
*Note: All stock prices and returns are through October 2, 2023.