The 2020 IPO market is heating up.
Initial public offerings are some of the highest-risk and highest-reward investments on Wall Street. Understandably, investors get excited about their first chance to back booming young companies, but IPO valuations are critical. Stocks such as Beyond Meat (ticker: BYND) and Zoom Video Communications (ZM) have been home run IPO investments in recent years. However, high-profile IPOs like Uber Technologies (UBER) and Blue Apron Holdings (APRN) have struggled in the public market. Investors should have plenty of opportunities to buy big-name IPOs in the second half of 2020. Here are seven IPOs that could happen this fall.
Travel giant Airbnb officially submitted a draft IPO registration in late August to the Securities and Exchange Commission. Investors have been anticipating the Airbnb IPO for years, but the health crisis has dealt a heavy blow to the travel industry and taken a major bite out of Airbnb’s valuation. Airbnb raised $1 billion in funding in April and is valued at $18 billion, roughly half of its 2017 valuation. In May, Airbnb laid off about 25% of its workforce in response to the pandemic. But plenty of long-term investors will still pull the trigger on the Airbnb IPO.
Cloud computing giant Snowflake officially filed for its IPO on Aug. 24. Snowflake reported $242 million in revenue in the first half of 2020, more than double its revenue from the same period a year ago. However, like many recent tech IPOs, the company is not yet profitable, reporting a $171.3 million net loss in the first half of the year. Snowflake helps companies store and manage data in the cloud, putting it in competition with cloud juggernauts Amazon (AMZN) and Microsoft Corp. (MSFT). In its most recent fundraising round in February, Snowflake was valued at $12.4 billion.
Asana is an app designed to help teams organize and manage their work. The company was established by Facebook (FB) co-founder Dustin Moskovitz. Like many high-profile tech IPOs recently, Asana has generated some impressive revenue growth, including nearly doubling its sales from $76.8 million in fiscal 2019 to $142.6 million in fiscal 2020. However, net losses also more than doubled in fiscal 2020 to $118.6 million. Asana’s valuation in 2018 was $1.5 billion. Instead of a typical IPO, Asana plans to pursue a direct listing, similar to the approach taken by Spotify Technology (SPOT).
Big data analytics firm Palantir officially filed to go public Aug. 25 through a direct listing. In its prospectus, the company reported 2019 revenue of $742.6 million, up 25% from 2018. Palantir also announced a $167.6 million net loss in the first half of 2020, which marks a stark improvement from the $579.6 million in net losses it reported in 2019. Palantir said in April it expects to reach $1 billion in revenue this year. In mid-2019, Palantir reportedly planned to target a $26 billion IPO valuation.
Robinhood is one of the hottest companies of 2020. The trading app has a young user base, half of whom are first-time investors. Some of the most popular Robinhood stocks of the year have been so controversial that the company recently decided to restrict public access to some of its data. Robinhood management has said an IPO is coming at some point, and the company raised $200 million at an $11.2 billion valuation in August. The stock trading app reportedly added 3 million new users in the first four months of 2020 and now has more than 13 million users.
Food delivery company DoorDash plans to join public competitors GrubHub (GRUB) and Uber Technologies by filing for an IPO in the fourth quarter of 2020, according to company insiders. Competitor Postmates was one of the most highly anticipated IPOs earlier this year, but Postmates ultimately opted for a $2.7 billion buyout in July by Uber. Even after the Uber-Postmates merger, DoorDash is still the leading U.S. food delivery service with 44% market share. Its latest $400 million fundraising round in June valued the company at $16 billion.
Instacart is a grocery pickup and delivery service with more than 25,000 retail partners. The company, which raised $225 million in capital in June at a $13.7 billion valuation, says its service coverage now exceeds 85% of U.S. households and 70% of Canadian households. Unlike other delivery services struggling to turn a profit, Instacart reportedly generated roughly $10 million in profits in April alone. Instacart’s chief technology officer said earlier this year that order volume has jumped 500% year over year, and app downloads in March were up 218%.
Keep a watch for these IPOs:
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