By: Usman Kabir
In this article, we discuss the 10 most anticipated IPOs in 2021 and 2022. If you want to skip our detailed analysis of these IPOs, go directly to the 5 Most Anticipated IPOs in 2021 and 2022.
Initial public offerings (IPOs) have been a hot item on Wall Street in recent months as private businesses look to cash in on the technology bubble dominating the market that has seen market valuations soar widely beyond expectations. In 2020, even though the first half of the year was quite subdued with regards to overall stock performance, the latter half witnessed more than a few blockbuster IPOs as the government relaxed monetary policies, offered stimulus packages, and announced the rollout of the COVID-19 vaccine.
Some of the big names that debuted on the market in the past few months include Airbnb, Inc. (NASDAQ: ABNB), the California-based vacation rental firm, DoorDash, Inc. (NYSE: DASH), the food delivery company headquartered in San Francisco, and Coinbase Global, Inc. (NASDAQ: COIN), the cryptocurrency exchange that operates remotely. Airbnb, Inc. (NASDAQ: ABNB) was valued at over $86 billion on the first day of trading. DoorDash, Inc. (NYSE: DASH) had a similarly high valuation of over $72 billion on the first day.
The momentum that these IPOs generated in late 2020 was carried into the new year as Coinbase Global, Inc. (NASDAQ: COIN) debuted on the market in April, closing the first day of trading with a market cap of close to $86 billion. According to research by Connecticut-based financial data firm FactSet, there were more than 160 IPOs in the fourth quarter of 2020 in the US, generating over $53 billion in total. Overall, there were 494 IPOs in 2020, more than double recorded in the previous year. The 2020 IPOs raised a combined total of $174 billion.
Data from SPAC Insider shows that there was a shift away from the traditional IPOs towards reverse mergers facilitated by Special Purpose Acquisition Companies (SPACs) last year, which raised more than $83 billion in market debuts. In the first six months of 2021, this number has already climbed past $100 billion. In the coming months, many more companies are expected to go public, presenting smart investors with a buying opportunity from which they can expect handsome returns. Most of these mega IPOs will be technology-related.
Stocks of tech companies like Snowflake Inc. (NYSE: SNOW), Unity Software Inc. (NYSE: U), Twitter, Inc. (NYSE: TWTR), and Facebook, Inc. (NASDAQ: FB) have soared in the past twelve months as the pandemic forced a digital reckoning within the business world, making many companies reconsider their traditional work models in favor of work-from-home options that relied heavily on tech hardware and software for smooth functioning.
Fintech companies are expected to dominate the list of blockbuster IPOs. These firms have transformed the finance world in the past few years and left market experts scratching their heads. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 most anticipated IPOs in 2021 and 2022. We focused on companies that are expected to generate significant investor interest on their market debut and offer a product that is expected to drive long-term revenues for years to come.
1. Krispy Kreme
Krispy Kreme is a North Carolina-based company that sells doughnuts and coffee. It was founded in 1937 and first went public more than two decades ago before being hit by market pressures and an accounting scandal that forced the firm to go private in 2016. The company is expected to go public again in a few weeks. The firm has an international presence, with operations in more than thirty countries where it sold more than 1 billion doughnuts last year. The overall revenue for the company in 2020 was over $1 billion, up 17% year-on-year.
According to media reports, Krispy Kreme has plans to pay off a portion of more than $1 billion in debt with the proceeds from the initial public offering. As the firm hits the market, possibly under the ticker DNUT on the NASDAQ, it could face competition from the likes of Starbucks Corporation (NASDAQ: SBUX), the Washington-based coffee seller with a market cap of over $131 billion. Starbucks Corporation (NASDAQ: SBUX) stock has soared in recent weeks as the economy slowly reopens following the pandemic.
In earnings results for the second fiscal quarter, posted in late April, Starbucks Corporation (NASDAQ: SBUX) reported earnings per share of $0.62, beating predictions by $0.09. The revenue over the period was $6.6 billion, up more than 11% year-on-year. The stock has returned more than 53% to investors over the past year. At the end of the first quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $4.4 billion in Starbucks Corporation (NASDAQ: SBUX), down from 67 the preceding quarter worth $4.9 billion.
Databricks is a California-based software company founded in 2013. It is placed ninth on our list of 10 most anticipated IPOs in 2021 and 2022. The company markets open source solutions to the management of big data. The products marketed by the company are used in artificial intelligence and machine learning. The firm is expected to go public late this year or early next year with a valuation of around $28 billion. The firm already has thousands of customers, including several Fortune 500 companies, and raised $1 billion in the latest funding round.
Databricks is famous for creating Apache Spark, a product that analyzes big data. The founders hope to expand Spark capability and make it a web-based platform for ease of use. In 2020, another software firm, Snowflake Inc. (NYSE: SNOW), the Montana-based cloud computing firm, went public in the largest software IPO in history, valued at over $75 billion on the opening day, reaching a share price of $245, a 104% gain from the expected initial price of $120. Databricks could also smash valuation estimates when it goes public.
On May 26, Snowflake Inc. (NYSE: SNOW) posted earnings results for the first three months of 2021, reporting earnings per share of -$0.70, missing market estimates by $0.19. However, the revenue for the first quarter of 2021 was close to $230 million, up 110% year-on-year. The company’s shares have returned 31% to investors in the past month. Out of the hedge funds being tracked by Insider Monkey, Altimeter Capital Management is a leading shareholder in Snowflake Inc. (NYSE: SNOW) with 32 million shares worth more than $7.3 billion.
WalkMe is a California-based software firm founded in 2011. It is ranked eighth on our list of 10 most anticipated IPOs in 2021 and 2022. The company provides products that make it easier for businesses to go digital. A flagship product of the firm is the Digital Adoption Platform (DAP), a platform that equips businesses with software and digital feature adoption tools using graphical interfaces and custom configurations for different types of applications. The firm is expected to go public in 2021 or 2022 with a valuation of over $2.5 billion.
According to reports, the firm will list on the NASDAQ under the WKME symbol and launch more than 9.3 million shares on debut. Last year, another software firm, Unity Software Inc. (NYSE: U), went public and managed to raise $1.3 billion on debut at a valuation of $13.6 billion. The firm has since reached a market cap of over $27 billion. Unity Software Inc. (NYSE: U) primarily markets software tools for video game developers and was founded in 2004 in Denmark under a different name.
On May 12, investment advisory Stifel gave Unity Software Inc. (NYSE: U) stock a Buy rating on the back of new developments for the firm in the automotive, engineering, and construction industries, as well as strong growth in the core video game development business. The stock has returned more than 21% to investors in the past month. At the end of the first quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $6.6 billion in Unity Software Inc. (NYSE: U), up from 32 in the previous quarter worth $11.9 billion.
Nextdoor is a California-based social networking company founded in 2008. It is placed seventh on our list of 10 most anticipated IPOs in 2021 and 2022. The company has a presence in 11 countries around the world and is different from other platforms as it requires users to post real names and addresses for posting on the platform. These posts are then visible only to other members on the platform that are from the same area. The firm is expected to go public this year or early next year at a valuation of over $4 billion.
Nextdoor has been hit by complaints about poor content policing in recent months that related to posts around the presidential election in the United States and the COVID-19 pandemic. The social media space is already saturated with many large-cap firms, including California-based Twitter, Inc. (NYSE: TWTR), and it is unclear how much room the new firm will be able to make for itself in the market. Twitter, Inc. (NYSE: TWTR) has hundreds of millions of users across the world and a market of close to $50 billion.
On June 2, Twitter, Inc. (NYSE: TWTR) announced that it would start rolling out notes on a new Birdwatch feature that allows select users on the platforms to report on tweets that may contain false or misleading information. The stock has offered investors returns exceeding 80% over the past twelve months. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Twitter, Inc. (NYSE: TWTR) with 7.7 million shares worth more than $495 million.
Just like Facebook, Inc. (NASDAQ: FB), Airbnb, Inc. (NASDAQ: ABNB), DoorDash, Inc. (NYSE: DASH) and Coinbase Global, Inc. (NASDAQ: COIN), Twitter, Inc. (NYSE: TWTR) is also one of the stocks that made huge waves when it first debuted on the stock market.
Discord is an application that offers users the ability to make instant voice, text, or video calls. It was initially released in 2015 and is available in 28 languages presently. The firm is placed sixth on our list of 10 most anticipated IPOs in 2021 and 2022. The application is used by more than a hundred million people across the globe. The application was initially just limited to making communications better between those playing video games, but eventually expanded into other sectors and raised $100 million last year to market itself to a wider audience base.
Discord has 150 million active users, 19 million active servers, places where groups can gather for conversations, per week, and around 4 billion server conversations per minute every day. Discord is part of a market segment that has gained prominence in recent weeks amid concerns around data privacy and security. WhatsApp, another instant messaging service, owned by Facebook, Inc. (NASDAQ: FB), is the market leader in this segment but has lost space in recent weeks to other alternatives like Signal and Telegram.
Facebook, Inc. (NASDAQ: FB) is still one of the largest technology corporations in the world and is more than capable of dealing with temporary setbacks. The company’s shares have returned more than 47% to investors over the past year. At the end of the first quarter of 2021, 257 hedge funds in the database of Insider Monkey held stakes worth $40 billion in Facebook, Inc. (NASDAQ: FB), up from 242 in the previous quarter’s worth $38 billion.
Just like Airbnb, Inc. (NASDAQ: ABNB), DoorDash, Inc. (NYSE: DASH), and Coinbase Global, Inc. (NASDAQ: COIN), Facebook, Inc. (NASDAQ: FB) is also one of the stocks that made huge waves when it first debuted on the stock market.
Rivian is a Michigan-based electric vehicle maker founded in 2009. It is ranked fifth on our list of 10 most anticipated IPOs in 2021 and 2022. The company is seeking to make a brand name for itself in the electric SUV and pickup truck market. It is developing semiautonomous all electric vehicles in these categories that would be more resistant to wear and tear than other electric vehicles and could be used for off-road driving as well. The firm is planning for an IPO in 2021 or 2022 and targeting an valuation of over $70 billion.
This would make Rivian one of the largest publicly traded electric vehicle companies in the US, behind traditional automakers who are investing in electric cars. It would also place Riviain as a rival to California-based EV firm Tesla, Inc. (NASDAQ: TSLA), owned by billionaire Elon Musk. Tesla, Inc. (NASDAQ: TSLA) stock has been sliding in recent weeks amid decreased demand for new vehicles in the Chinese market and pressure from competitors like Ford, which debuted an all-electric truck last month which is set to rival Rivian products as well.
However, Tesla, Inc. (TSLA) stock has still managed to return more than 192% to investors in the past twelve months. On June 8, the stock rallied amid media reports that delivery numbers for the month were going to be better than expected, and investment advisory Wedbush maintained an Outperform rating on the stock. Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Tesla, Inc. (NASDAQ: TSLA) with 24 million shares worth more than $16 billion.