Potential major IPOs to watch for in 2022.
What a difference a year makes. The contrast between the market for initial public offerings, or IPOs, in 2021 and in 2022 is night and day. U.S. IPOs hit a record high in 2021, with 1,073 companies hitting the public markets. In the first six months of 2022, that number plunged to just 92, according to FactSet data. Extreme volatility in the stock market was recently punctuated by the S&P 500 entering a bear market. On top of that, the Federal Reserve has undertaken a series of rapid interest rate hikes not seen since 1994, inflation is running at its hottest levels since the early 1980s, and some form of recession looks increasingly likely. That said, a number of private companies have been prepping to go public, and some may still do so in the second half of the year. Here are nine of the most anticipated upcoming IPOs to watch in 2022.
Discord
Named by U.S. News as one of the top upcoming IPOs to watch in 2022 back in December, the popular social messaging app hasn’t yet confirmed a move to go public, but signs in the first half of the year began pointing to a move to tap public markets. In March, Bloomberg reported that Discord was interviewing investment bankers to prepare to go public, with the app reportedly considering a direct listing. Discord, which surged in popularity during the pandemic and enjoys a strong brand and cultlike user base, is a popular communication tool in the gaming and cryptocurrency communities. Confident in its ability to keep growing, Discord turned down a $12 billion buyout offer from Microsoft Corp. (ticker: MSFT) in 2021. In September 2021, the company raised $500 million at a $15 billion valuation.
Potential 2022 IPO valuation: $15 billion
Popular social media and message board website Reddit filed confidentially for an IPO in late 2021, giving a good indication that it would be one of the biggest upcoming IPOs in 2022. Reddit’s valuation has gone parabolic in recent years, with private financing rounds valuing the company at $3 billion in 2020 and $10 billion in 2021. In January, Reddit reportedly tapped Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) as lead underwriters for its initial public offering, apparently aiming for a public valuation of at least $15 billion. There are indications the tech rout may force that valuation to come down a bit, with early investor Fidelity Investments reportedly marking down the value of its stake in Reddit by more than a third in April.
Potential 2022 IPO valuation: $10 billion to $15 billion
Instacart
Instacart, like Discord, ended up benefiting from pandemic-era lockdowns and the subsequent work-from-home economy that persists in 2022. But after reportedly tripling revenue to $1.5 billion in 2020, an expected slowdown in growth has gripped the company, as it tries to pivot to operations in a more normal operating environment. One such effort for the grocery delivery app is its push into digital advertising; Instacart delayed plans to go public last year to focus on expanding that line of business. It’s a natural, higher-margin business for the company, which caters to customers already intent on making a purchase. While a July 2022 executive team shakeup could point to Instacart getting its ducks in a row before an IPO, the company cut its own valuation by nearly 40% in late March in response to market conditions, making an IPO at its highest valuation of $39 billion unlikely, at least in 2022.
Potential 2022 IPO valuation: $24 billion
Databricks
It’s rare for companies to achieve valuations of more than $30 billion without IPO chatter, and cloud-based data storage and analysis company Databricks is no exception. Counting Amazon.com Inc. (AMZN), Salesforce Inc. (CRM) and Alphabet Inc. (GOOG, GOOGL) among its investors, it’s easily one of the hottest investments in the world of venture capital. The high-tech firm, whose services use artificial intelligence to sort, cleanse and present Big Data for customers, raised $1.6 billion at a $38 billion valuation last year from investors that included Bank of New York Mellon Corp. (BK) and the University of California’s investment fund. Unfazed by the market beatdown peer Snowflake Inc. (SNOW) has taken — the Warren Buffett holding is off about 56% in 2022 through mid-July — CEO Ali Ghodsi said earlier this year that the company’s “growth rate will break through the multiple compression that’s happening in the market” if and when Databricks goes public.
Potential 2022 IPO valuation: $38 billion
Chime
Chime, a fast-growing financial technology, or fintech, company, has a noble business model. Chime offers digital financial services to low-income and underbanked people and does away with regressive schemes like traditional overdraft fees and account minimums. Chime aims to cast a wide net and cater to the masses with this model, and it makes money through Visa Inc. (V) debit cards it offers, earning a chunk of interchange fees every time its card is used. Noble as its business may be, Chime isn’t immune to market forces, and the company, valued at $25 billion in 2021, was expected to go public in the first half of 2022 when the year began. Barron’s even reported that Chime had selected Goldman Sachs to help underwrite the IPO. However, Barron’s also reported in late May that the offering was no longer expected in 2022, citing people familiar with the matter. Still, never say never: If stock market sentiment quickly improves, Chime might find itself back in play this year.
Potential 2022 IPO valuation: $25 billion or more
Mobileye
Mobileye has been public before and has concrete plans to return to the sweet embrace of public markets. Or rather, chipmaker Intel Corp. (INTC) has plans to take Mobileye public again, five years after acquiring the machine vision company for $15.3 billion. One of the leaders in self-driving-car technology, Mobileye provides its tech to major automakers like Ford Motor Co. (F) and Volkswagen. Intel originally planned to integrate Mobileye’s technology and patents into its own self-driving division, but the option to spin out Mobileye as a separate company and retain a majority ownership in the business may be the best way for Intel, which is struggling to catch up to faster-growing rivals like Nvidia Corp. (NVDA), to capitalize on one of its most prized possessions. That said, in July, a report broke that the Mobileye IPO was being put on hold until the market stabilizes, although a fourth-quarter 2022 debut hasn’t been ruled out.
Potential 2022 IPO valuation: $50 billion
Impossible Foods
As is the case with a number of other hot IPOs to watch for 2022, Impossible Foods has seen 2021’s fantastic window of opportunity devolve into a bloodbath for recently public companies as investor risk tolerance continues to wane. The closest publicly traded analog to Impossible Foods is the other major player in plant-based meats, Beyond Meat Inc. (BYND), which took a 54% haircut from the beginning of the year through July 14. Impossible Foods’ products are carried by the likes of Burger King and Starbucks Corp. (SBUX). While Impossible Foods may be wise to wait until the latter half of 2022 for an IPO, the CEO called going public “inevitable” as recently as November, the same month the company raised $500 million at a $7 billion valuation. While reaching a similar valuation in public markets may prove difficult in 2022, you can be sure that private investors will be pushing to maximize its go-public market cap.
Potential 2022 IPO valuation: $7 billion
VinFast
Mere months ago, Vietnam’s largest conglomerate, Vingroup, was all but certain to seek an IPO for its electric vehicle arm VinFast in the second half of 2022. The company has grand plans, shooting for 42,000 vehicle sales in 2022 — an annual sales figure it sees soaring to 750,000 vehicles by 2026. VinFast expects to sink $4 billion into the development of an electric SUV factory in North Carolina, where it has vowed to create 7,500 jobs. Having previously stated its desire to raise $3 billion at a $60 billion valuation, the latest line from the company has a more cautious tone. In May, Vingroup Chairman Pham Nhat Vuong confirmed that the company, while still eyeing a fourth-quarter IPO, could possibly delay the offering until 2023 if market conditions weren’t favorable.
Potential 2022 IPO valuation: $60 billion
Stripe
Among the upcoming IPOs to watch in 2022, San Francisco-based online payments Stripe is undoubtedly the hottest and most highly anticipated. Stripe’s e-commerce software processes payments for massive tech players like Amazon.com and Google and enjoys enormous funding from private venture sources and institutional investors, allowing it to wait out any market turmoil. Often compared to PayPal Holdings Inc. (PYPL), Stripe conducted a $600 million May 2021 funding round actually valued the company at $95 billion. PayPal’s own valuation in the public markets was roughly $80 billion as of July 14. While the growth of areas like e-commerce helped dramatically accelerate Stripe’s growth during the pandemic, even Stripe isn’t immune to recent events and just cut its internal valuation by 28% to $74 billion, according to a July report from The Wall Street Journal.
Potential 2022 IPO valuation: At least $74 billion
9 upcoming 2022 IPOs to watch:
— Discord
— Instacart
— Databricks
— Chime
— Mobileye
— Impossible Foods
— VinFast
— Stripe
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9 Hot Upcoming IPOs to Watch in 2022 originally appeared on usnews.com
Update 07/15/22: This story was published at an earlier date and has been updated with new information.
