The U.S. initial public offering market experienced a boom in 2020 that has so far carried over into 2021. There were a record 407 IPO stocks last year that collectively raised a total of $195 billion in funding — more than double the 195 total new listings in 2019.
In 2021, the U.S. IPO market has shown no signs of slowing down. In the first quarter, the U.S. market hosted more than 100 IPOs that raised $32.9 billion, according to Renaissance Capital.
In April, the most recent high-profile new listing was cryptocurrency exchange Coinbase Global (ticker: COIN). Coinbase’s Nasdaq debut was technically a direct listing rather than a traditional IPO, but the stock began trading for the first time on April 14. In about three weeks, Coinbase shares are up around 5% from their $250 initial reference price.
The IPO boom is on track to continue in May, with some of this year’s most highly anticipated new listings potentially just weeks away. Here are five of the biggest IPOs to watch in May.
— Honest Company (HNST)
— Five Star Bancorp (FSBC)
— Flora Growth Corp. (FLGC)
Honest Company (HNST)
Honest Company is a consumer goods company known for its celebrity co-founder, actor Jessica Alba. Honest sells baby products that use safer, more natural ingredients than the synthetic chemicals used in competing products.
Honest reported $301 million in revenue in 2020, up 28% from the previous year. The company’s net loss also narrowed to $15 million in 2020, down from $31 million the previous year.
Honest has also dealt with its fair share of controversy since its founding in 2011. In 2017, the company agreed to a $7.4 million settlement for wrongfully labeling ingredients as natural, plant-based or chemical free.
Honest raised $413 million from its IPO at a valuation of around $1.4 billion. The company priced its shares at $16 and began trading on May 5.
Five Star Bancorp (FSBC)
Five Star Bancorp is a California bank that has seven branches, two loan production offices and $2 billion in total assets, as of the end of 2020. The company filed confidentially for a $100 million IPO on April 9 and started trading on the Nasdaq under the ticker FSBC on May 5.
Five Star was founded in 1999 and reported $75 million in revenue in 2020. The company offered 5.27 million IPO shares at $20 per share.
Five Star has said existing shareholders will receive a cash distribution of $27 million upon the IPOs completion, and the remainder of the funds will go to boosting capital levels and funding organic growth strategies.
Bank stocks have been hot so far in 2021, and any indication in coming months that inflation could trigger Federal Reserve interest rate hikes sooner than expected could be a further bullish catalyst for Five Star.
Flora Growth Corp. (FLGC)
Flora Growth is a Canadian medicinal-grade cannabis products producer. Flora is expecting to sell 3.3 million shares at an IPO price range of between $4 and $5, suggesting a potential diluted market valuation of around $221 million.
Flora was founded in 2019 and reported $2 million in sales in the 12 months ending on June 30, 2020. The company says it intends to supply pharmacies, medical clinics and cosmetic companies with high-quality, cannabis-derived medicinal and well-being products.
Cannabis stocks have been hot since Democrats gained control of the White House and both houses of Congress back in November. However, additional upside in the near term may depend on the legislative progress of cannabis legalization efforts under the new administration.
Flora filed its IPO paperwork on March 11, and its shares are expected to begin trading on the Nasdaq under the ticker FLGC on May 11.
Couchbase is a database software company that could be the next billion-dollar tech IPO. Couchbase filed for its IPO back on March 11, according to Reuters.
The company generates more than $100 million in revenue and could be valued at as much as $3 billion, according to sources familiar with the matter. Couchbase’s customers include heavy-hitters in the tech world, such as Cisco Systems ( CSCO), Intuit ( INTU) and PayPal ( PYPL).
Investors may see parallels between Couchbase and database solutions company Snowflake ( SNOW), which went public in September 2020. In roughly seven months, Snowflake shares have nearly doubled from its IPO price of $120.
Couchbase has reportedly been considering an IPO since way back in 2016. The company has not yet announced a potential IPO date, but the March filing suggests its listing date could potentially come before the end of May.
Robinhood is a commission-free trading app that has become extremely popular among younger traders, particularly during the boom in retail trading in 2020. Robinhood’s past 12 months have been as controversial as they have been successful. Robinhood CEO Vlad Tenev was recently called to testify before Congress after Robinhood temporarily restricted its users from buying GameStop and other so-called “meme” stocks associated with targeted buying campaigns orchestrated by Reddit’s WallStreetBets community.
Despite the controversy surrounding its trading restrictions, Robinhood filed for an IPO on March 23.
Investors won’t have a crystal-clear picture of Robinhood’s financial situation until the company’s S-1 filing becomes public. However, Forbes has estimated Robinhood’s valuation at about $40 billion.
Morningstar estimates Robinhood generated $682 million in payment for order flow in 2020, a controversial practice in which brokers receive rebates in exchange for directing orders to certain parties for execution.
Given the timing of the initial IPO filing, Robinhood could easily pull the trigger on its IPO by the end of May.
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Update 05/07/21: This story was published at an earlier date and has been updated with new information.