In many ways, a New Year means new beginnings. For the U.S. capital markets, initial public offering (IPO) activity may continue to hold strong. Several well-capitalized startups would like a public exit. Understandably, many companies remain somewhat secretive about their IPO ambitions. Below are a few big-ticket IPO predictions for 2022.
Food and Grocery Delivery IPO
San Francisco-based Instacart may find the public markets an attractive option. There has been speculation about an Instacart IPO for months. The grocery delivery giant planned to go public in the fourth quarter of 2020, but plans have been pushed back repeatedly. In the food and grocery delivery space, several companies have had successful public debuts. DoorDash went public in late 2020. Its shares surged over 80% on the first day of trading.
2022 may bring many fintech IPOs. Several noteworthy fintech IPOs occurred in 2021, including Affirm, Robinhood, Coinbase, and Nubank.
Stripe could be one of 2022’s largest IPOs. Stripe’s payment platform has a current valuation of over $100 billion. Millions of companies in over 120 countries used it. There are reports that Stripe has talked with bankers to prepare for an IPO. However, Stripe’s founders, Patrick and John Collison, tightly control the company. Adding new public investors could dilute the founder’s ownership stake, which could disincentivize them to go public.
Observers anticipate that Klarna, a Swedish payment provider, will make a 2022 public market debut. The fintech unicorn is the most valuable fintech company in Europe and is among the world’s top five most valuable fintech companies. Klarna’s “buy now, pay later” model provides consumers with interest-free financing to facilitate purchases. In June 2021, the company was valued at $45.5 billion and boasts 90 million active users.
Cloud Computing Software IPO
Interest is growing around the potential IPO of Databricks, a cloud company that helps thousands of organizations worldwide process and analyze data. Analysts have drawn comparisons to the September 2020 IPO of Snowflake, a cloud-computing based data warehousing company. At that time, Snowflake’s IPO was the largest software IPO. Databricks is in a capital-intensive business. Therefore, it is enticing to gain access to the public markets for additional capital. “Building a whole data and AI stack, creating a new category, it’s going to take a lot of investment,” said Ali Ghodsi, the CEO of Databricks.
Private equity firms that have gone public in recent years have experienced strong stock market performances. Some private equity firms that went public in recent years include Apollo Global Management, Blackstone Group, KKR, and Carlyle Group.
TPG Partners, LLC, a private equity firm with over $100 billion in assets under management, filed a Form S-1 registration statement with the Securities and Exchange Commission (SEC). TPG hired J.P. Morgan and Goldman Sachs to serve as lead underwriters for the IPO.
The Fort Worth, Texas-based financial firm has a diversified set of investment strategies. It fouses on the technology and healthcare sectors. TPG has made investments in notable companies such as Airbnb, Burger King, Crunch Fitness, Ducati, Neiman Marcus, Spotify, and Vice Media.
There are rumors that Reddit, the social media platform that helped fuel the meme stock hype, will go public in 2022. In 2021, Reddit propelled meme stocks including GameStop and AMC to record-breaking stock prices. In its last funding round, the social media company was valued at around $10 billion. Reddit’s predicted revenue for 2021 is $350 million, nearly double the revenue generated in 2020.
There are predictions that Verily Life Sciences, which started as a division of Google X, will go public in 2022. The San Francisco-based startup focuses on developing technology-based solutions to disease detection and management. Its COVID-19 testing services were praised by California Governor Gavin Newsom as a “national model” in 2020. However, California terminated its contracts with Verily Life Sciences in February 2021. This decision was made due to uncertainty about the availability of supplies, long wait times, and poor logistics. Despite the COVID-19 testing hiccup, Verily Life Sciences is on an upward trajectory and there are indications the startup’s management team has an IPO in the works.