IPOs to watch in 2021
Last year brought a number of highly anticipated initial public offerings, as the likes of Airbnb (ticker: ABNB), Palantir (PLTR), Snowflake (SNOW), DoorDash (DASH) and Unity Software (U) all hit the market. Despite a pandemic, 2020 turned out to be a great year for IPOs, with 494 IPOs raising a combined $174 billion, setting new records on both counts, according to data from FactSet. Rock bottom interest rates and continued post-pandemic spending packages should keep demand for new issues high, and there's no shortage of quality private companies looking to tap public markets. Here are 10 of the most anticipated IPOs to watch in 2021.
One of only two names on last year's list of highly anticipated IPOs that didn't go public in 2020, Bumble enters the year as arguably the single hottest company tapping public markets in 2021. The parent company to the eponymous Bumble dating app -- which boasts more than 100 million users -- is seeking to raise more than $1 billion from its 2021 IPO, which will see the company list on the Nasdaq under the symbol "BMBL". One positive omen for the Bumble IPO: It will double the current selection of dating app stocks, where Tinder parent Match Group (MTCH) has reigned supreme as the only option for investors bullish on the sector.
Potential 2021 IPO valuation: around $6 billion
It's no surprise that Instacart, the grocery delivery app, is anxious to go public. Its closest analog among the 2020 IPOs was DoorDash, which saw rabid investor demand, going public at a $32 billion valuation before soaring on its first day of trading to a valuation of roughly $70 billion. Although it raised financing at a $17.7 billion valuation last year, Instacart reportedly hired Goldman Sachs (GS) to be its lead underwriter in its widely anticipated 2021 IPO, hoping to fetch a valuation around $30 billion. Instacart saw rapid growth last year on the heels of the pandemic as people sought to avoid public places; the company reportedly hit three years' worth of growth metrics in a period of 30 days.
Potential 2021 IPO valuation: between $17.7 billion and $30 billion
It's crazy the difference that a month can make. Entering 2021, Robinhood was undoubtedly one of the hottest upcoming IPOs for 2021. The no-commission trading app, which turns 8 this year, rapidly gained a fanatic user base of small retail investors and millennials, forcing a paradigm shift in the brokerage industry that saw Charles Schwab, E-Trade, Fidelity and others eliminate commissions in recent years. But Robinhood's popularity was practically shattered overnight in late January when the platform banned users from buying GameStop (GME) and a number of other hot Reddit stocks that its users fervently wanted to purchase. In the days following that debacle, Robinhood raised $3.4 billion through existing investors and by tapping revolving credit lines. Whether through an IPO, direct listing or special purpose acquisition company (SPAC), Robinhood is likely to be public by the end of 2021, and likely the end of the second quarter. The question is: What will its valuation be? The range is wide right now.
Potential 2021 IPO valuation: between $10 billion and $20 billion
Adopting Robinhood's agnostic approach to exactly how it'll go public -- either a traditional IPO, direct listing or reverse merger via SPAC will do the trick -- neighborhood-focused social media and news app Nextdoor is reportedly aspiring to go public at a valuation in the neighborhood of $4 billion or $5 billion. Led by former Square (SQ) chief financial officer Sarah Friar, who was CFO of Square when that company went public in 2015, the company certainly has a C-suite well-suited for an ambitious IPO. Little is known about its financials right now, but Nextdoor did achieve a valuation of $2.2 billion in its last financing round, which took place around 2019. It also boasts a bevy of blue-chip venture capital backers, including Kleiner Perkins, Greylock Partners and Tiger Global Management.
Potential 2021 IPO valuation: between $4 billion and $5 billion
If Stripe goes public in 2021, it could be the most valuable company of the year to make the private-to-public leap. Definitely the hottest upcoming IPO for 2021, the payments processing software company has already successfully attained a valuation higher than all previous companies mentioned, raising $600 million at a $36 billion price tag in April 2020. Late last year, news broke that the company, which saw booming demand for digital payments in the wake of the pandemic, was already seeking to raise additional capital at valuations between $70 billion and $100 billion. Stripe has the cachet and investor demand to stay private indefinitely at this point, so if it doesn't go public in 2021, it will remain a sought-after private company for years to come.
Potential 2021 IPO valuation: between $70 billion and $100 billion
Although Roblox initially planned to go public last year in an IPO, the company delayed that move after massive opening day jumps in stocks such as Airbnb and DoorDash, which rose 112% and 86%, respectively, on their first day of trading. Those jumps revealed a problem with accurately pricing an IPO, something direct listings avoid through an auction process that cuts out the underwriter. The gaming platform, which is immensely popular with kids, saw daily active users jump 82% to 31.1 million between Sept. 30, 2019 and Sept. 30, 2020. A software business relying on user-generated content and the sale of digital goods, Roblox just raised funds in January at a $29.5 billion valuation.
Potential 2021 IPO valuation: $30 billion or more
Leading cryptocurrency exchange Coinbase is well deserving of its place among the top 2021 IPOs to watch, as currencies such as Bitcoin and Ethereum hit all-time highs in recent months. Coinbase, like Roblox, will also go public via a direct listing. The company will list on the Nasdaq and has recently allowed pre-IPO shares to trade on the Nasdaq Private Market, fetching valuations between $50 billion and $75 billion. Coinbase earns a spread of about 0.5% on each transaction, as well as a transaction fee of at least 1.49%. That means the company directly benefits from not only the rising popularity of cryptocurrency, but the higher nominal prices of cryptocurrencies as well.
Potential 2021 IPO valuation: between $30 billion and $75 billion
UiPath is one of the leading companies in the robotic process automation space, recently raising $750 million at a $35 billion valuation in a private funding round -- a steep jump from the $10.2 billion market capitalization it earned just last year. Robotic process automation, or RPA, is a Luddite's nightmare. UiPath uses artificial intelligence to automate certain mundane tasks with its software, replacing those jobs with new technology. Growth has gone meteoric in recent years, with annual recurring revenue surging from $8 million in April 2017 to reported revenue around $360 million as of late 2020.
Potential 2021 IPO valuation: more than $35 billion
A play on big data, ThoughtSpot is a technology and analytics company that could go public later in 2021. There aren't yet official financials for investors to comb through, but the most recent publicly reported revenue numbers saw top-line growth decelerate from 108% in 2019 to 88% in the fiscal first quarter last year. The company hasn't raised money since August 2019, when it raised $248 million at a $1.95 billion valuation. Customers include large corporations like Walmart (WMT), Disney's (DIS) Hulu and convenience store chain 7-Eleven. Another upcoming IPO in 2021 with impressive management, co-founder Ajeet Singh already has experience launching a public company, having founded cloud computing and technology infrastructure company Nutanix (NTNX).
Potential 2021 IPO valuation: more than $2 billion
Ascensus isn't the most exciting company in the world, but it has got the size to be taken seriously. Ascensus services 401(k) plans, IRAs, 529 plans and health savings accounts, with more than $347 billion in assets under administration. As of now, it's looking like a mid-2021 IPO is likely. Barclays and Goldman Sachs will serve as two of the underwriters on the upcoming offering. Ascensus services the accounts of more than 12 million Americans and has more than 40 years in the industry, so while it may be a new entity to the public markets, it's a long-running, stable business that can be counted on.
Potential 2021 IPO valuation: around $3 billion
Ten of the biggest 2021 IPOs to watch:
-- Robinhood Markets