Upcoming IPOs can mean big profits for investors.
With the pandemic hanging over the markets like a dark cloud, many initial public offerings were put on hold in 2020. As companies came to terms with the pandemic and investors bought into an incredible market turnaround, IPOs have roared back to life — and there’s no sign of public offerings slowing down anytime soon. On top of traditional IPOs, direct listings and acquisitions via special purpose acquisition companies, or SPACs, continue to bring even more companies to market. In the third quarter, there was a 195% increase in the number of IPOs year over year, according to data from FactSet. With all this activity in 2020, will the IPO market have any steam left in 2021? Analysts think so, and investors need to know what upcoming IPOs to keep an eye on in order to profit. Here are the biggest potential IPOs in 2021.
Not only has Robinhood forced an entire industry to play catch-up by offering zero-fee trades, the financial services company has also been instrumental in this year’s rise of the retail investor. Founded in 2013, Robinhood had accrued 1 million users by 2016. Today, a whopping 13 million users are on its platform — 3 million of whom joined in 2020 alone. Perhaps more importantly, many of these users tend to be younger than the average investor, securing Robinhood a long-term user base that will continue to help the company profit well into the future. Robinhood needs to go public first, and analysts believe that could happen as soon as the first quarter of 2021. With a valuation of $11.7 billion as of September and the attention of millions of millennials, Robinhood is absolutely one of the biggest IPOs to watch in 2021.
Tinder — one of the many dating apps under Match Group’s (ticker: MTCH) umbrella — may still be the most popular dating app around, but Bumble is catching up fast. Bumble allows women to make the first move when two heterosexual singles match up. The app has reached new heights of popularity, hitting 100 million users in mid-2020. After all, there’s an ongoing boom in the world of virtual dating — with the added dangers of meeting strangers in intimate settings, a generation of mobile-savvy singles are turning to dating apps in order to make a connection during the pandemic. Bumble intends to capitalize on its captive audience, and it might hit the markets in the first quarter of 2021 with a valuation of $6 billion to $8 billion.
A large part of success depends on being in the right place at the right time — and this year, Instacart found itself at that sweet spot. The online grocery delivery company has practically become an essential service in 2020, serving as a middleman between customers trying to order groceries while stuck at home and companies that had never before needed delivery services. As a result, Instacart’s valuation rose from $7.9 billion at the beginning of 2020 to more than $17 billion by early October, after a fundraising round that brought in $200 million. Instacart will use that cash infusion to continue to expand its business beyond the 500 retailers and 40,000 store locations it already serves, and an IPO sometime in early 2021 will help the company raise the money it needs to grow even bigger.
Social media companies like Facebook (FB) have made it easy to connect with people around the world — but Nextdoor is focused less on who’s across the country and more concerned with who’s across the street. Nextdoor is a social network for neighborhoods, allowing neighbors to swap information about what’s going on around their block — and it has become a particularly handy platform for locals to help one another through the pandemic with health tips and support. Maybe that’s why one in four neighborhoods around the country uses Nextdoor, according to the company, and it’s looking to capitalize on this surging popularity by going public sometime in 2021 at a valuation between $4 billion and $5 billion. The potential for Nextdoor to serve up hyperlocalized ads to users is a unique business model, and investors may want to be prepared for when the latest innovation in social media goes public in 2021.
One of the hottest trends investors should be watching entering 2021 is digital payments. Exchanging hard currency suddenly took on a lot more risk in 2020, but exchanging money over the internet not only removes that risk but also facilitates faster transactions. One company looking to capitalize on this trend is Stripe, which “builds financial tools and economic infrastructure for the internet” — in other words, it allows companies of all shapes and sizes to accept digital transactions. Stripe’s customers range from online startups to Salesforce.com (CRM), which the company struck a deal with in September to build an out-of-the-box payment solution for its Digital 360 product. Deals like this bring Stripe ever-closer to an IPO, though a date for its public debut has yet to be determined. With a $36 billion valuation that only continues to grow, it seems more and more likely that Stripe will make its public debut sooner rather than later.
The housing market heated up over the course of 2020 as people stuck at home realized they wanted a little more home to be stuck in. Better.com makes it easier for would-be homeowners to find and pay for the house of their dreams, streamlining the process of getting a mortgage and paying loans. That’s an invaluable service — one that customers are thrilled to use, which in turn has made Better.com one of the largest mortgage lenders in the country during the third quarter. Better.com may want to strike while the iron is hot, and reports indicate that the company is exploring an IPO in early 2021 for somewhere near its current $4 billion valuation.
The biggest IPOs to watch in 2021:
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The Biggest IPOs Investors Are Looking Forward to in 2021 originally appeared on usnews.com