Investors hunting for most of the hottest initial public offerings (IPOs) may have to wait for some time, especially as there is a recession on the horizon for late 2023. Still, that doesn’t mean there aren’t some hot IPOs you can watch out for that may go public in Fall 2023. The selection may not be wide, but you can very well find some great deals.
The last two years have been dull regarding IPOs, as 2020 and 2021 were record years in terms of companies going public. So far this year, there have only been 63 IPOs in the U.S. market, down 38.8% from the same period last year. And that’s considering the fact that 2023 has been a relatively good year for the stock market so far. To put things into perspective, there were 1035 IPOs in 2021 and 480 IPOs in 2020. Still, there are some major companies that are rumored to make a debut this fall.
Here are three of them:
- Instacart
- SeatGeek
Reddit filed for an IPO with the U.S. Securities and Exchange Commission in December 2021, and it was expected to go public in 2022. However, the economic and geopolitical turmoil likely dissuaded the company from making that decision last year. It is one of the most anticipated companies that is set to go public and many believe that it could debut in the fall of this year.
Reddit generates most of its revenue from online advertisements and is the ninth most popular website in the U.S. There is also a $5.99 subscription for some features within the platform and users can buy Reddit coins to reward posts that they like with awards. Of course, these things alone aren’t likely to make this platform very profitable, and the valuation is near $6.6 billion, as per The Information. That’s very low, considering the platform has over 50 million monthly active users.
However, I believe it also means there’s a lot of room for growth left for the company, which could make it one of the hottest IPOs to watch for Fall 2023. If an IPO does happen this year with a valuation below $10 billion, it’ll be a steal.
Instacart
Instacart is one of the most popular and successful online grocery delivery services in the US and Canada. The company allows customers to order groceries from a variety of stores and have them delivered to their doorsteps in as little as an hour. Instacart also offers pickup options for customers who prefer to collect their orders themselves.
Instacart filed confidential paperwork with the SEC for an IPO in 2022. However, much like Reddit, the company has reportedly postponed its plans to go public in 2022 due to market volatility and unfavorable conditions for tech stocks.
Unlike Reddit, this fast-growing company has a positive EBITDA of $100 million. Still, profitability can be a tricky metric to measure for fast-growing startups like Instacart, as they often reinvest their earnings into expanding their business and acquiring new customers. Instacart’s revenue grew almost 40% last year to $2.5 billion, similar to competitors like DoorDash (NYSE:DASH). According to Reuters, that would imply a valuation of just $11 billion. But again, that would be a massive discount since Instacart does not burn cash like DoorDash does.
SeatGeek
SeatGeek, a mobile-focused ticketing platform for live events, filed for an IPO in April 2023. The company generates revenue by charging fees to both buyers and sellers of tickets on its marketplace, as well as by selling software and services to its partners. SeatGeek expects to pull in $500 million in sales, betting on the continued demand for live events and the shift to digital ticketing as it prepares to join the public markets. It nearly went public last year via a SPAC but changed course after securing $238 million in private funding.
It is hard to say if the company is profitable or burning cash, but I would bet on the latter as it still seems to be in the growth phase, which requires a lot of expenditure on marketing and product development.
Regardless, the interest from the Street is there, and anything near its previously anticipated $1.3 billion valuation would be very compelling, making this one of the hottest IPOs to watch for Fall 2023.
On the date of publication, Omor Ibne Ehsan 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.