Yahoo Finance's Daniel Howley and Rainmaker Securities CEO Greg Martin take a look at companies that went public in 2021 and those that will likely go public in 2022.

Video Transcript

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- Well, 2021 has been a record year for IPOs, for SPACs, for that matter, as well. It has just been a blockbuster year, both in terms of the number and in terms of the money raised for IPOs. Our Dan Howley has been looking ahead to what might be the big buzzy names for 2022. Hi, Dan.

DANIEL HOWLEY: How's it going, Julie? That's right, we spoke to some of the experts at Renaissance Capital, and they were giving us some of the lowdown on what could be some of the biggest IPOs of 2022. And I want to start off with a company that you may not know about if you're not into autos, but VinFast. They are a Vietnamese automaker. They only recently started producing their own vehicles, gas-powered. But what they're doing in 2022 is launching their new electric cars.

They're going to have the VF E35 and the VF E36. These are going to be launching in the US and Europe. That's the big deal here. In 2022 alone, they're going to launch 60 showrooms. And they'll have them hitting the streets by the end of this year. They're basically SUVs. And they showed them off in November at the LA Auto Show. That valuation from that company is looking at potentially $60 billion. So you know, it's going to be a little more modest than what we saw out of Rivian, but still playing into that whole EV explosion that we've seen in recent years.

And then after that, I want to talk about, following in the footsteps of automobiles, Mobileye. This is the company that Intel acquired for $15 billion back in 2018. We talk about it a lot when we talk about Intel's quarterly revenues. They basically produce the technology that helps drive self-driving vehicles, or helps self-driving vehicles see, hence the name Mobileye.

And right now, they're actually running a pilot in Paris, where the workers at local retail stores are able to book rides for themselves using taxis that are powered by Mobileye's technology. So really interesting stuff. We're expected to see potentially $15 billion from that IPO.

And next, obviously we talked about this all throughout 2021, I think starting in January or February, Reddit. Obviously, that was really what started the meme stock craze. Wall Street Bets, everything having to do with AMC or GameStop all originated from there and that particular subreddit. And really, when you look at Reddit, they've been around since 2005. They have 50 million daily active users, 100,000 different subreddits, and 50 billion monthly views. So a massive site. We're looking at a potential for $15 billion in valuation. And obviously, they generate revenue through both advertising and subscribers. So a big name there.

And then after, Flipkart. $38 billion potential valuation. They are backed by Walmart. They're basically going toe to toe with Amazon's Indian store. And they provide different things ranging from apparel to home goods, you know, big washers, dryers, anything you can think of, really. And they have 100,000 sellers, 100 million registered users. Obviously, India a huge market that a lot of companies want to try to penetrate. And Flipkart being there already and being kind of the homegrown brand, big deal. And they're also investing heavily into grocery delivery and close-time grocery delivery.

And then finally, I want to hit on a company that you may not know of Automation Everywhere. Potential $7 billion IPO here. They essentially make the software for bots. Basically, the software that can help make mundane tasks like data entry easier for things like HR departments, customer service, anything along those lines. And they produce that type of software. So while it might not be as cool as an EV or as trendy as Reddit, still a big name there. Again, $7 billion potential IPO in 2022.

- What a great rundown, Dan Howley. Thank you so much. And indeed, I had not heard of that last one. And really helps us set up there for 2022. Thanks so much. Happy new year, Dan. Appreciate it.

DANIEL HOWLEY: Happy new year.

- Of course, the big question when we talk about all these IPOs is what's going to be the demand. Obviously, we have seen big demand this year that has sort of waned as the year has gone on. Let's talk about that with Greg Martin, Rainmaker Securities CEO. He's joining us now. Greg, thanks for being here. So how are you thinking about that question? As I said, we have seen some of these IPOs roll over, a lot of the hot IPOs from this year trading below their initial prices. What does that bode for 2022?

GREG MARTIN: Well, thank you for having me, Julie. And you know, at Rainmaker, we manage one of the largest pre-IPO trading platforms, enabling buyers and sellers to transaction private companies. So we have a really interesting lens into what companies will go public and what the demand will look like and how they will perform.

2021 was really a tale of two cities. It was one of the biggest years ever in terms of number of listings, but it was a very poorly performing year, where over 2/3 of IPOs actually traded below their IPO price. So the aftermarket trading performance was very poor.

You know, we've already seen 400 companies file for IPOs for 2022, potentially, representing over 70 billion. So it is shaping up to be another large year of IPO volume. But I do think that there is some trepidation on the part of investors. Obviously, the performances of IPOs in 2021 is a factor, but there's a lot of potential headwinds in the market.

We're all faced every day with the virus, and what might happen next with the virus. Obviously, there is inflationary concerns. There's a question of whether interest rates will start ticking up. And we've been very fortunate, we've had a very low interest rate environment for a long time, but we have some signaling that there might be some interest rate hikes coming.

So there's a lot of potential headwinds in the market, but valuations are still strong. It was a very great year from a performance on the overall market indices perspective. Valuations are still strong. So even though IPOs haven't performed as well, I think that what will likely happen is that there will be more rationalized pricing of the IPOs in order to provide the typical premiums that IPO investors will look for. So I still expect a very strong year of demand for IPOs in 2022.

- Greg, why do you think some of these buzzy IPOs of this year are underperforming? I'm looking right at Coinbase, right at Robinhood. I mean, these are significant platforms, yet the stocks have really gone straight down.

GREG MARTIN: You know, I mean, they were priced to perfection, I think. I think both of those companies hit the markets at a very good time. They were coming off tremendous growth quarters. Obviously, Robinhood was benefiting from the meme stock craze and a massive rise in installs, and really priced its IPO at a very high point. Coinbase the same way. It was coming off a massive growth couple of quarters, and priced it very high. Obviously, there were some factors in terms of crypto kind of trading down since Coinbase has priced.

And so I think, you know, the question there is, if you're the company, is it a bad thing that you raised money at a really high price, took less dilution? You know, you got the money, you got less dilution. Is it really a bad thing that your price traded down? Obviously, it's not great for employee morale. It doesn't send a great halo effect. But the same thing happened to Facebook. You know, Facebook priced many years ago at a very high price, traded down significantly, and look where they are now.

I think those are both strong companies. I think that people who take a long-term view of those companies will end up doing well. But obviously, you know, the near-term story for both of those companies is that they've traded down. I think what will happen is, companies will lose a little bit of power in terms of their ability to push their underwriters to get their IPO price up because investors are just going to demand the type of IPO returns that they're used to. And so I do think that there's going to be some valuation shifts as these new companies come public in 2022.

- Greg, just quickly here, from what you're seeing on your platform, what has liquidity been like? I mean, we saw a lot of liquidity at the beginning of the year, people getting stimulus checks, putting that to work in the market. What is happening now, and what does that mean for 2022?

GREG MARTIN: Yeah, you know, we're still seeing a pretty significant flow of interest into the secondary space for these pre-IPO private companies. I mean, people want to be part of the companies that are growing. And a lot of these companies continue to stay private longer and longer. Companies like Stripe and ByteDance and others are attracting multiple $100 billion valuations as a private company. So there's still a lot of liquidity. But you know, clearly people are making bets in the private markets based on a future successful IPO. And so when the IPO markets are down, you know, people are holding back. And I do think valuations are going to get affected.

I mean, there was a really interesting Snowflake effect, when Snowflake went public back last year, that everyone wanted to be in the private companies before they went public because they saw the massive increases in valuation from being from the last private rounds to the public offering, and then beyond. And I do think that that has-- will stall a little bit. And so what I expect is there will be liquidity, but I think there'll be more rational valuations in 2022.