The U.S. initial public offering market boomed in 2020 and has accelerated in the first half of 2021. Even before the end of June, U.S. IPOs had collectively raised $171 billion in 2021 alone — already surpassing the $168 billion record from last year, according to Dealogic.
Recent IPO investors have gotten some large payoffs out of the gate. The average one-day gain for IPO investors this year has been 40.5%, up from 28.2% in the first half of 2020.
In June, the highest-profile new listing was Chinese ride-hailing company Didi Global (ticker: DIDI). The stock began trading on June 30. It finished its first day up about 1% from its IPO price, giving the company a roughly $67 billion market capitalization.
Many investors expect the IPO boom to continue in July and beyond. Here are five IPOs to watch:
— Authentic Brands Group (AUTH)
— Robinhood Markets (HOOD)
— Couchbase (BASE)
— The Fresh Market
Authentic Brands Group (AUTH)
Authentic Brands is a brand management firm that has been swooping in to buy up popular retail brands that were forced into bankruptcy in recent years. Authentic has partnered with shopping mall operators Simon Property Group ( SPG) and Brookfield Property Partners ( BPY) to acquire Aeropostale, Brooks Brothers, Forever 21 and other struggling retailers. The company also owns Lucky Brands and Juicy Couture.
On July 6, Authentic Brands filed a prospectus for its IPO saying it hopes to raise $100 million, although that figure is only a placeholder and may change. An earlier report from CNBC said that the company seeks a $10 billion valuation; that would represent a nearly 150% premium to the more than $4 billion valuation the company had during a 2019 private fundraising round.
The report also said Authentic shares could start trading by the end of July.
Robinhood Markets (HOOD)
After months of teasing investors, stock trading app Robinhood finally filed for its IPO on July 1. In the filing, Robinhood disclosed 18 million funded accounts and $80 billion in assets under custody.
A boom in retail stock trading during the pandemic created a massive tailwind for Robinhood. The company reported $522 million in revenue in the first quarter of 2021, up 309% from a year ago.
However, Robinhood has also endured plenty of controversy in the past couple of years. CEO Vlad Tenev was recently called to testify in front of Congress after Robinhood temporarily restricted trading in GameStop Corp. ( GME) and other so-called “meme” stocks earlier this year. In June, Robinhood was fined a record $70 million by the Financial Industry Regulatory Authority related to platform outages and misleading communication and trading practices in 2020.
Robinhood plans to allocate between 20% and 35% of its IPO shares to sell directly to its users. Robinhood shares could begin trading on the Nasdaq exchange as soon as late July.
Investors have been watching database software company Couchbase closely since Reuters reported that it confidentially filed its IPO paperwork back in early March. Couchbase finally pulled the trigger on an IPO filing on June 21, potentially opening the door for a July listing.
Earlier this year, Reuters reported that Couchbase could be valued at up to $3 billion. The company reported $108 million in revenue in the 12 months ending in April 2021. Couchbase’s customer base of 549 companies includes more than 30% of the Fortune 100.
Some investors may see similarities between Couchbase and database solutions software company Snowflake ( SNOW), which completed its IPO in September 2020. In roughly nine months, Snowflake shares have more than doubled from their $120 IPO price.
Couchbase has not officially provided a timeline for its listing, but it’s likely now a matter of weeks before the IPO is completed.
The Fresh Market
The Fresh Market is a gourmet grocery chain that has had a somewhat unconventional path to the public market. The Fresh Market previously went public back in late 2010 but struggled to compete with Whole Foods, Kroger Co. ( KR) and others.
Apollo Global Management ( APO) acquired The Fresh Market in 2016 for $1.36 billion. The deal was priced at $28.50 per share, a nearly 30% premium to the stock’s IPO price six years earlier.
Apollo has since helped to restructure The Fresh Market’s business, and ratings agency Moody’s upgraded The Fresh Market’s credit rating in February. Moody’s said sales likely grew by more than 20% in fiscal 2020, and the company’s leverage should remain below 5.5x through at least February 2022.
The Fresh Market announced its confidential submission of proposed IPO documents back on March 12, and a July IPO date is possible.
Online grocery delivery service Instacart was one of the few companies that saw its business boom during the 2020 lockdowns. Instacart has built a sizable logistics network that includes partnerships with more than 400 retailers and reaches 80% of U.S. households and 70% of Canadian households.
Instacart’s most recent private fundraising round in March 2021 valued the company at $39 billion — more than double the $17.7 billion valuation it had in October 2020.
In October 2020, the Financial Times reported that Instacart was in discussions with investment banks to take the company public in the first half of 2021 via an IPO. However, in March 2021, Reuters reported that Instacart is now considering a direct listing rather than a traditional IPO.
The first half of 2021 came and went without an Instacart IPO or direct listing, but an update on the situation could be coming sometime in July.
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