Initial public offerings are a way for private companies to raise more money from the public, by offering their shares to the public on the stock market. This is an important time for private companies to become more widely available and allow investment access to the public.
Upcoming IPOs can benefit private investors in particular. This is because many IPO companies will include share premiums for their existing investors, so this can result in potential profits. Existing shareholders of a private company will likely include family, friends, and professional investors such as venture capitalists. These private equity investors help to finance companies with high growth potential in exchange for a stake in their equity.
What is IPO investment?
An initial public offering (IPO) happens when shares of a previously private company are offered to the public on a stock exchange. This is part of a new stock issuance. A company that is planning an IPO will select underwriters to manage their financial risk, and chooses a stock exchange in which to feature their newly public shares. When the company goes public, the private shareholders’ shares will value at the same price as the public share. These are usually a higher value and therefore, they will profit from the relative returns that were expected.
In general, companies can register for an upcoming IPO after reaching a market capitalisation of $1 billion, which is the same for a ‘unicorn company’. However, as long as the business can meet the listing requirements for a specific market and prove their potential for future profit, they can also qualify for an IPO.
Upcoming IPOs to watch
- Reddit IPO: Online social network and message board Reddit has just hired its first CFO as it prepares go public on the stock market. The current value of the company is around $6 billion and it plans to expand the business even further with the funding that it receives from the IPO, which may occur in 2021. Reddit's IPO comes at a convenient time for the company, after traders of the forum sparked a rally in January 2021 of shorted stocks such as Gamestop and AMC, causing a short squeeze for the former company.
- ByteDance IPO: ByteDance is the owner of popular Chinese social media and video app TikTok, which has already been valued at around $50 billion, despite being a private company. Reports say that TikTok's parent company is looking at an IPO within the next year, where the company will be listed on a Chinese or Hong Kong-based exchange.
- Brewdog IPO: Craft-beer brewer BrewDog is a British company that has repeated its plans for an IPO on the London Stock Exchange at some point in 2021. The company previously announced its plans in 2018 but has been waiting for the right time to debut its shares to the public. BrewDog's IPO could value the company at over £1 billion.
- Kraken IPO: American cryptocurrency exchange Kraken is expected to debut its shares on the stock market in 2022, making it the second US-based crypto stock to go public. The company is reportedly tied between having a traditional IPO or using a special-purpose acquisition company (SPAC), although it may have too high of a value for the latter and therefore, it would be more likely consider a direct listing. Kraken is currently valued at around $4 billion but this could rise to $20 billion after its next funding round.
- WeWork IPO: Shared workspace start-up WeWork officially filed for an IPO in 2019 but has since decided to take the company public through the SPAC process. The deal is expected to go ahead in Q3 of 2021 and will value the company at approximately $9 billion. The announcement comes after a troubled year of declining revenue due to the Covid-19 crisis, as the company was previously valued at $47 billion two years previously.
- Stripe IPO: Digital payments provider Stripe is planning a direct listing as it doesn't need to raise money, it has been reported. The company is backed by Elon Musk and serves clients such as Google, Amazon and Zoom, and it has been hailed as one of the world's most valuable start-ups. It was last valued at $95bn in a fundraising round in March 2021.
- Rivian IPO: US company Rivian focuses on the manufacturing of electric vehicles and automotive technology. Rivian has already raised $5bn ahead its IPO, which could take place in September. The company is expected to have a valuation of around $70bn and is backed by the likes of Amazon and Fidelity Investments.
- Instacart IPO: Online grocery delivery service Instacart is currently valued at $39bn and could be even more when it debuts on the stock market later in 2021. It hasn't yet announced whether it will opt for a traditional IPO or direct listing. The company has raised $265m in private fundraising this year, thanks to the rise in online grocery shopping due to Covid-19.
- Starlink IPO: Elon Musk's satellite constellation is due to IPO as a spin-off from parent company SpaceX, although it is unknown when the company plans to do this, as Musk is looking for "more predictable cash flows" first. The company is valued at around $42bn or potentially higher, currently generating annual revenues of $10bn.
- Monzo IPO: British online bank Monzo is joining the fleet of UK tech companies to debut on the stock market between 2021 and 2022. The unicorn start-up was originally valued at £2bn in 2019 but this was slashed to £1.24 in 2020 after a fundraising round. CEO TS Anil believes that this figure is undervalued and Monzo could be worth a lot more, so keep an eye out for updates.
- Virgin Atlantic IPO: Richard Branson is planning an IPO to help its airline company recover from the pandemic, with expected losses of £1bn throughout the period. The stock will most likely list on the London Stock Exchange and could happen as early as Autumn 2021.
- Houzz IPO: American home design website and community Houzz's IPO is eagerly awaited by investors, and there is speculation that the company could choose either an IPO or SPAC route at some point in 2021. Despite dismissing around 10% of its staff last year, the housing sector has experienced new highs in 2021 and Houzz raised $400m in 2017, with an estimated valuation of $4bn.
- Allbirds IPO: Eco-friendly shoemaker Allbirds is expected to list on a US-based exchange in Autumn 2021. The company is a leader in sustainable footwear and is currently valued at over $1.7bn, having achieved unicorn status at the end of 2018. Allbirds recorded a top performing year in 2020 in terms of revenue, opening its first brick-and-mortar stores in the process.
- Olaplex IPO: One of the largest independent hair care brands in the world, Olaplex is owned by parent company and private equity firm, Advent. It will be offering 67 million shares priced between $14 and $16 in its IPO, which is expected to take place at the end of September, seeking a valuation of over $10bn.
- Polestar IPO: Swedish EV manufacturer Polestar, which is a part of the Volvo and Geely group, is planning a SPAC merger with Gores Guggenheim, which should take place at the end of September. The SPAC raised $800m in a fundraising round in May 2021 and the company is expected to be valued at over $20bn, given the rising trend in clean energy and sustainability.
- Volvo IPO: Swedish luxury car manufacturer Volvo Cars is owned by parent company Geely, who aim to raise over $2.9bn in one of the biggest listings in Europe of the year. It will be listing on the Nasdaq Stockholm stock exchange at some point in 2021. The automotive company plans to shift its entire car range to fully-electric models by 2030, and it could be valued at around $20bn.
- Databricks IPO: Software start-up Databricks is an artificial intelligence (AI) powered data company. It has reached a valuation of $38bn after multiple rounds of financing this year from the likes of Fidelity and Franklin Templeton. Its clients include Royal Dutch Shell and AstraZeneca, with an annual recurring revenue of over $600m.
How to trade on IPO stock
A number of trading platforms specialise in pre and upcoming IPOs, where you can browse and choose a stock to invest in, before its future IPO is carried out. Once the company is public, however, you can trade it like any other share in the stock market, using financial derivatives, such as futures, forwards and options contracts.
After a company has passed the IPO process and listed its shares on a stock exchange, it will be available for public trading. With us, traders can speculate on the price movements of the underlying share through spread betting and contracts for difference (CFDs), which are both derivative products. These products allow you to trade on price movements without taking ownership of the asset, so you can either go long or short on your position.
Private companies with an upcoming IPO could include rivals to some of the largest companies in the world, within the technology, renewable energy, e-commerce, and healthcare industries, at the very least.
- GitLab IPO: GitHub competitor GitLab is a DevOps platform that aims to reduce the software development cycle, with over 100,000 customers in 55 countries. It listed on the Nasdaq on 14 October under the ticker 'GTLB' after a successful year, with an annual revenue growth of 143%. The company is now valued at approximately $16.5bn. Trade on our GitLab share price here.
- Oxford Nanopore IPO: Oxford Nanopore Technologies is a provider of rapid Covid-19 tests to Britain's national health service. The company free floated of at least 25% of its shares on the London Stock Exchange in early October, reaching a valuation of almost £5bn as its share price surged by 45% upon debut. Trade on our Oxford Nanopore share price here.
- Duolingo IPO: Language-learning company Duolingo, which operates primarily through its app, has witnessed a 97% revenue growth year over year. It listed on the Nasdaq exchange on 28 July at $141 per share, a much higher figure than its initial pricing of $102. Duolingo closed up by 36% at the end of the day, giving the company an estimated valuation of $6.5bn. Trade on our Duolingo share price here.
- Robinhood IPO: US stock and options trading app Robinhood has grown its user base by a third this year and it is valued at around $35bn. Robinhood debuted on the NASDAQ exchange, a popular choice for technology companies, at the lower end of its share offering of $38 apiece. Trade on our Robinhood share price here.
- Bridgepoint IPO: Private equity firm Bridgepoint has joined a rare collection of UK buyout companies listed on the London Stock Exchange. Its IPO raised over £780m to give the company an overall valuation of £2.9bn or even higher, given that its stock jumped over 28% on its debut day of trading. Trade on our Bridgepoint share price here.
- Seraphim Space IPO: Seraphim Space Investment Trust is a new fund that gives investors access to 15+ privately-held companies within the space sector. The company debuted on the London Stock Exchange on 14 July 2021, raising £178m through pricing 180 million shares at 100p each. Richard Branson is said to be an early investor since the IPO. Trade on our Seraphim Space Investment Trust share price here.
- Wise IPO: One of the most eagerly awaited fintech IPOs, the online payments service Wise (formerly known as TransferWise) offered its shares to the public on 7 July 2021 on the London Stock Exchange. The British company has experienced rapid international growth over the past couple of years. Wise shares opened at 800p and were up 10% by the end of its debut trading day, giving it a valuation of over £8bn. Trade on our Wise share price here.
- Krispy Kreme IPO: American doughnut leader Krispy Kreme returned to the stock market in early July 2021. The company first went public in 2000 and was bought by a private investment company in 2016 after filing for bankruptcy. The company raised over $500m and opened at a lower share price than it originally planned at $16.30 apiece. However, the stock quickly jumped up to $21 on its first day, giving the company an overall valuation of around $3.4bn. Trade on our Krispy Kreme share price here.
- Didi IPO: Chinese ride-hailing company had its IPO on 30 June 2021, raising $4.4bn in the process. It was the largest US listing of a Chinese company since Alibaba in 2014. The company sold over 316m shares at $14 apiece, giving it an overall valuation of approximately $70bn. Trade on our Didi share price here.
- Full Truck Alliance IPO: The leading Chinese online freight platform raised over $1.5bn in its IPO in June 2021 by selling over 82.5m American depositary shares. Its stock jumped around 15% upon opening on the New York Stock Exchange. Trade on our Full Truck Alliance share price here.
- Oatly IPO: Swedish vegan dairy alternative brand Oatly listed on the NASDAQ exchange on 20 May 2021, giving the company a valuation of over $10 billion. The rise of veganism in recent years has become an investor trend, with other plant-based companies reporting a rise in share price and consumer activity. Oatly's share price climbed from an expected $17 to $22 on its first trading day, raising $1.4bn in the process. Trade on our Oatly share price here.
IPO investing platform
To trade on the price movements of an upcoming IPO stock after it has passed the process, our online trading platform, Next Generation, offers spread betting and CFD trading on more than 8500 stocks and ETFs. It is simple and easy to register for a live account and start trading the share market now.
You can also keep up to date with the latest news and analysis for the stock market, as we keep our online platform updated with daily reports and predictions from our professional market analysts. Alternatively, if you would like to see data from external news providers, our news and insights section offers fundamental analysis stock reports from Morningstar and live updates on the share market from Reuters.
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