a The “unicorn phenomenon” that has begun massive fundraising rounds for start-ups over the past decade is “finally exploding” and manifested in a record wave of IPO activity, says Beachbook investment analyst Cameron Stanville. Thanks in part to the trillions of dollars in venture capital that have been spent on startups over the past decade, he says the trend of roaring $1 billion companies getting high public market valuations is unlikely to abate in 2022.
2,388 companies raised $453 billion during their IPO in 2021 — the highest annual deal volume ever, according to Ernst & Young. In the US, deal volume also broke records, with nearly 1,100 companies going public and raising nearly $260 billion. Crypto exchange Coinbase, online broker Robinhood, and Tesla rival Rivian were among the companies that attracted investors and fueled a record wave of initial public offerings and live listings.
Now, private equity giant TPG, food delivery service Instacart, and meme-stock supplier Reddit are among the companies gearing up for their 2022 debut. Stanville expects deal count to hit a new high in 2022, but he’s not sure of an increase in value Deal. “This is hard to predict,” he explains, citing uncertainty about huge “outsider style” deals, such as those pulled by Coinbase and gaming platform Roblox Gen-Z, which opted for direct listing in March after delaying its first-trading rollout in 2020 amid fears of price hikes after the IPO. If it finally goes public, payments giant Stripe — the country’s most valuable startup, valued at nearly $100 billion — could help drive a new IPO record.
as performance? “IPOs can be as attractive as lottery tickets, but it’s hard to say which will be the boom or bust,” says Lindsey Bell, chief markets strategist at Ally Invest. Despite the “excitement and hype” about many of the public listings, Bell cautions that new stocks often pose higher risks than those with longer tenures. For example, Coinbase rose 75% on the company’s first trading day in April, shortly after the unprecedented surge in retail trade in the first quarter. However, stocks have since collapsed more than 45% and hit new highs, with retail movement and cryptocurrency prices slowing.
Despite the spread of companies to IPOs, half of companies listed on US stock exchanges between 2015 and 2019 were trading below IPO prices one year later, notes Lindsey Bell of Ally Invest.
Renaissance ETFs, which hold about $700 million in assets and promote ownership of the “largest, most liquid, and newly listed” US IPOs, rose 107% in 2020 but fell about 9.5% in 2021. Compare that to gains of 27 % and 23% for the S&P 500 and the tech-heavy Nasdaq, respectively. “This is not a new trend,” Bell says of the poor post-IPO performance, noting that half of US companies that went public between 2015 and 2019 were trading below IPO prices one year later.
Meanwhile, stock market volatility jumped to an 11-month high in December after the Federal Reserve announced plans to raise interest rates three times this year and phase out its purchases of pandemic-era bonds by March in response to decades-high inflation. , resulting in stock withdrawals. The S&P is down nearly 4% from a record close just days ago. Higher interest rates, which tend to hurt public company earnings and stock prices, are a top consideration, Stanville says, as you anticipate more volatility that could eventually delay some IPO plans or even discourage others altogether in the short term.
Despite the increased risks, there are still a large number of special-purpose buyouts that are actively looking for deals and are likely to provide a significant tailwind for the IPO, notes Stanville. There are currently about 575 SPAC companies on the nearly $155 billion raised for private companies eager to list on a US stock exchange—already rivaling the record 606 SPAC floated companies last year. (Forbes Media announced in August that it will be rolling out to the public via SPAC this year.) Although the Securities and Exchange Commission is calling for stricter disclosure requirements for these time-saving public vehicles, the sheer amount of money available — and the potential for SPAC sponsor returns — will likely be enough to boost The IPO market despite the ongoing uncertainty, especially since most companies do not have more than two years to close a deal or return the cash.
The IPO market is preparing for another huge year, but it is unclear whether it will lead to a rebound or a crash. Here are the companies to watch ahead of their 2022 IPOs.
Latest Rating: $25 billion after financing in September
San Francisco digital bank Chime is in talks to go public with a valuation of up to 45 billion dollars As soon as possible in March, tell someone familiar with the matter Forbes in October. The company hasn’t made the plans official yet, but the timing makes sense: CEO Chris Brett said in September 2020 that Chime would be “ready for an IPO” within one year. “I might get calls from a couple of SPACs a week to see if we were interested in getting into the markets quickly,” he said at the time.
Latest Rating: $15 billion after financing in September
Although the online chat service has yet to make an official announcement, investors have been eyeing Discord’s initial public offering since the company ended talks with Microsoft in April to be acquired for at least $10 billion. “We’ve had a lot of offers,” CEO and co-founder Jason Citron, who sold a gaming startup for $104 million in 2011, told CNBC the following month. Citron described it as a “tremendous opportunity” for the company and its nearly 150 million active users, but it hasn’t announced specific exit plans.
Latest Rating: $4 billion after funding in August 2020
Founder and CEO Pat Brown said in November an IPO was “inevitable” for the vegan-friendly food company, but stopped short of giving a clear timeline. Reports indicate that Impossible, which has raised about $1.5 billion since its founding in 2011, is looking to 10 billion dollars Valuation – Indicates real competition with another vegan burger maker Beyond, which listed on Nasdaq in 2019 and is worth about $5 billion.
Latest Rating: $39 billion after financing in March
The grocery delivery service was originally hoping to dive into public markets last year amid rumors of an evaluation 50 billion dollarsBut new CEO Fidji Simo has delayed plans until this year to help expand services beyond just food delivery. The market hasn’t been very nice to rival DoorDash, whose shares have fallen about 15% since its first trading day in December 2020, but eMarketer points out that Instacart has a trick – a fast-growing advertising platform that retailers can click to promote their products in results. search.
Latest Rating: $10 billion after funding in August
On December 15, Reddit secretly submitted papers to be released to the public this year, but has not disclosed any financial details and said it still hasn’t said how much it is looking to raise. Since the massive funding round in August, the 16-year-old social media owner behind the explosive stock craze last year has reportedly been looking forward to… 15 billion dollars evaluation. While that’s steep compared to the commercial multiples of competitors like Facebook and Twitter, enthusiastic Redditors are already clamoring to make the platform itself the next stock meme.
Latest Rating: $95 billion after financing in April
For more than a year, the payments processor founded by billionaire brothers Patrick and John Collison has been flirting with an IPO to drive growth with new money in the public market. And while John told CNBC in August that Stripe was “very happy as a private company,” the PayPal competitor was reportedly talking to investment banks in September about a market debut this year that could push the fintech company beyond. $100 billion evaluation. If the founders decide to make the decision, Stripe will easily become one of the largest IPOs to hit the market.
Properties under management supervision: $109 billion as of December
Late last month, the private equity firm founded by billionaires James Coulter and David Bonderman announced plans to list on the Nasdaq. Although it keeps many details under wraps, the company listed a bid size of $100 million, but suggested that this could likely increase depending on investor interest. The company, which is said to be looking forward to an overall valuation of 10 billion dollarsShe owns huge stakes in talent agency CAA, Vice Media and Spotify. His debut would breathe new life into public private equity listings after a massive buyout boom.
Latest Rating: $2 billion market capitalization as of January
Former President Donald Trump stunned investors after announcing plans in October to bring his social media company to the public via a plumber. Shares of Digital World Acquisition Corp. rose. , increased more than 1,700% as retail investors invested in the stock late last year — which briefly helped it surpass the $10 billion market capitalization, compared to the expected valuation of $875 million—Before dropping by 70% once the enthusiasm has cooled. The company, which was founded in February and has yet to release a working product, has revealed plans to cash in on the retail frenzy by raising about $1 billion from investors. However, regulators have already begun to act, with the Securities and Exchange Commission launching an investigation into stock trading and high-profile communications last month. No one has been charged with wrongdoing, but it is unclear how this will affect Trump’s latest money-making venture.