- These five upcoming initial public offerings (IPOS) are among the most promising ones to watch. They will make headlines and offer volatile stock trading with elevated valuations and risk.
- Reddit: Is the communities’ network that was at the center of meme trading.
- Discord: Provides a platform for people to communicate via voice, video and text chat.
- Chime: This fintech company provides low-cost banking services.
- VinFast: Is a Vietnamese electric vehicle manufacturer targeting the U.S and European markets.
- Instacart: This grocery delivery service delivers groceries and other goods to your home in the U.S. and Canada.
2021 was a very strong year for initial public offerings (IPOs) in the U.S. stock market, with more than 1,000 listings. Nearly 59% of these new listings were special purpose acquisition companies (SPACs), as the SPAC phenomenon was in full force. Additionally, nearly 73% of the new listings chose Nasdaq as their exchange, as tech stocks were strong and had momentum until the end of the year.
As we have entered the fifth month of 2022, things for IPOs look different compared to 2021. The global IPO market has witnessed a meaningful slowdown in Q1 2022 and important headwinds include geopolitical risk, inflation, and rising interest rates.
There are two main scenarios for upcoming IPOs in 2022. The first one is that some companies will delay their listing as they monitor the above challenges and risks. The second one is that some companies can decide to go public regardless of the negative sentiment in the U.S. stock market and in other global capital markets. The rationale is that going public marks a milestone achieved and new powerful ways to grow and pursue strategic goals. At the same time, the volatility of the capital markets should not be a scary thing, taking into consideration that like in stock trading and investing, finding the perfect timing is challenging and difficult to achieve.
These five hot upcoming IPOs are ones to have on your radar. Remember that history may or may not repeat itself in weak performance results for IPOs. These investments can be risky and are only suitable for investors with a tolerance for high volatility.
Hot Upcoming IPOs: Reddit
Reddit is a network of communities for people to share their passions and interests. It’s WallSteetBets community was behind many meme stocks rising to fame in 2021. Users can share links, posts, videos, and images and interact in active communities.
Reddit started its seed round for raising capital back in 2015 and as per the latest Series F funding back in Aug. 2021, it raised $410 million and had a pre-money valuation of $9.6 billion. Now that Twitter (NYSE:TWTR) is expected to go private later in 2022, Reddit seems like a good social media platform to fill the gap for publicly traded social media companies.
Discord
Discord is an app that offers free voice, video, and text chat for people to talk about their common interests. Users can create their own channels based on a topic of their choosing and can only provide access to other people by invitation. Although Discord is popular for video games, it has expanded to almost any topic, from sports to music communities.
Discord has 350 million registered users with 150 million monthly active users. It is estimated that Discord is worth more than $15 billion after raising $500 million in a new financing round.
Hot Upcoming IPOs: Chime
Chime is a financial technology (fintech) company that wants to help its users manage their money easily. It offers a cost-benefit advantage on banking services with features like no monthly fees and a fee-free overdraft. Chime has partnerships with regional banks for designing financial products that are more competitive in terms of fees and pricing compared to other banks.
Back in Aug. 2021, an article on Reuters stated that the valuation of Chime was $25 billion after raising $750 million in its latest funding round. The competition in the fintech industry is fierce, but more players in this market means better options for consumers. Chime is poised to benefit in an era of rising interest rates.
VinFast
Do we need another electric vehicle (EV) maker going public as the competition in the EV market is getting more intense? The answer is yes. VinFast, a private automotive startup manufacturer based in Vietnam, is joining this EV revolution. Its current line of models includes VF 8, an electric SUV, and VF 9, a seven-seat SUV. Its models feature advanced technology and hand-crafted details. Additionally, VinFast has announced a partnership with Amazon (NASDAQ:AMZN) for its models to integrate the Amazon Alexa voice experience into their vehicle models.
The company is considering raising up to $1 billion to prepare for its IPO in the U.S. market.
Hot Upcoming IPOs: Instacart
Instacart, a grocery delivery app that lets you either order groceries for delivery or pickup, is a company that is large enough to now enter the U.S. stock market. With around 55,000 stores ranging from local to chain stores and serving more than 5,500 cities in the U.S. and Canada with millions of orders delivered yearly, the traction is present.
In Mar. 2021 in a new funding round, Instacart raised $265 million. The company was estimated to have a valuation of $39 billion. Instacart may have missed the opportunity to go public amid the pandemic, but this is not a negative thing, as the firm is offering promos and coupons. These offerings should have a strong demand and support its revenue growth, as inflation is at historic highs in the U.S. market.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.