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This past year was the strongest Initial Public Offering (IPO) market in two decades, but 2021 is shaping up to blow 2020 out of the water.
There have already been 216 IPOs on the U.S. stock market this year, as of February 19, 2021, which is +645% more than the same time in 2020, which had only 29 IPOs by this date.
Investors are hungry for new stocks, and they’ll have plenty of exciting ones to choose from in 2021.
Let’s jump right into the biggest IPOs to watch for 2021.
2021 IPOs to Watch
#1. Robinhood IPO
- Expected IPO Timeline: Q2 2021
- Expected IPO Valuation: $40+ billion
Robinhood is a commission-free trading platform that has been the default choice for retail investors since its launch in 2015.
Regardless of the scrutiny, it’s experienced during the GameStop trading fiasco, Robinhood’s IPO is “full steam ahead.”
In fact, the mobile trading app has never been more popular – its single biggest download day occurred on the day that Robinhood restricted trading, notching 440,000 unique first-time installs in the U.S.
Robinhood’s user interface is unmatched amongst trading platforms. However, its vibrant colors and exploding confetti after buy orders cause some to criticize its “gamification” of the stock market.
#2. Stripe IPO
- Expected IPO Timeline: 2021
- Expected IPO Valuation: $125 – $150 billion
Stripe is a financial service and SaaS company that primarily offers payment processing software and API for e-commerce websites and apps.
It’s been called the Internet’s “toll collector” because it nearly gets a cut of every internet transaction.
Stripes provides payment software for Amazon, Google, Shopify, Squarespace, Salesforce, Zoom, Uber, countless others and collects a 2.9% swipe fee and 30 cents for every transaction it processes.
Some believe that Stripe could be the next addition to the FAAMG stocks (hopefully, the acronym gets changed to something a little easier to pronounce), suggesting that the company could 10x from its IPO price.
Stripe hasn’t announced any official plans for an IPO, but Wall Street expects it to occur sometime in 2021. Buckle up.
Learn More: What is FinTech?
#3. Coinbase (Direct Listing)
- Expected IPO Timeline: Late February – Early March 2021
- Expected Public Listing Valuation: $77 billion
Coinbase is the world’s most popular cryptocurrency exchange with more than 43 million users on its platform, which is more than Vanguard and Charles Schwab.
A few things are lining up rather well for Coinbase – cryptos like Bitcoin and Ethereum are on historic runs, and companies that have recently gone public are performing very well.
The former may be due to fears of oncoming inflation, and the latter may be due to a near-zero interest rate market.
Coinbase is striking while the iron is hot and officially taking crypto mainstream.
In the true spirit of crypto, the company will forgo the traditional path of hiring an investment bank and go public via a direct listing, with estimates suggesting a share price of $303.
Related: Best Cryptocurrency Exchanges
#4. Roblox IPO
- Expected IPO Timeline: February 2021 (postponed)
- Expected IPO Valuation: $30 billion
Roblox is among the world’s most popular gaming sites for children and offers a suite of games across mobile devices and consoles.
It has 31 million active daily users, 7 million of whom have made at least one game of their own. Wait, what?
That’s right, Roblox provides game creation tools so its users can engineer their games and share them with millions of others on the platform.
Additionally, America’s children spend an average of 156 minutes per day on the platform, surpassing TikTok (58 min), YouTube (54 min), and Instagram (35 min) comfortably.
However, the company has delayed its public offering due to SEC scrutiny of its revenue accounting.
The SEC is looking into how Roblox recognizes revenue from the sale of its currency, Robux, on its platform.
#5. Instacart IPO
- Expected IPO Timeline: Q1-Q2 2021
- Expected IPO Valuation: $30 billion
Instacart is a grocery delivery and pick-up service that makes getting groceries, alcohol, and home essentials easier than ever – the service allows customers to order groceries from participating retailers, with the shopping being done by a personal shopper.
All of the shopping is done on the Instacart Marketplace app, which collects a $3.99 delivery and 5% service fee for each order.
It’s easy to imagine this company’s success during the pandemic, but two schools of thought have formed on Instacart in a post-pandemic world.
One is that consumers will return to their old shopping habits once normalcy resumes. The other suggests that people are willing to pay extra to save time and for more convenience when it comes to their groceries.
We believe it will be a combination of the two and will vary depending on each consumer’s financial and geographical situation.
Regardless, Instacart provides a service that Americans may have always wanted but never knew they did.
#6. Plaid IPO
- Expected IPO Timeline: 2021
- Expected IPO Valuation: $15+ billion
Plaid is a financial services company that uses a data transfer network to securely power FinTech and digital finance products.
Plaid is the service that makes connecting your bank account to your Venmo safe and simple.
It is the behind-the-scenes FinTech company that makes all of the other FinTech companies look good – connecting to 11,000 financial institutions across the U.S., Canada, and Europe. Plaid makes money by collecting fees from the apps or services it connects.
Visa had plans to acquire Plaid in late 2020, but the Department of Justice filed an antitrust lawsuit to stop the merger, alleging that Visa is a monopolist in the online payments space.
The $5.3 billion acquisition has been abandoned, resulting in Plaid making its own plans to go public on its own, in what is rumored to be a much higher valuation.
Learn More: Best FinTech Stocks
#7. Epic Games IPO
- Expected IPO Timeline: N/A
- Expected IPO Valuation: $20 billion
Epic Games is a video game and software developer that became wildly popular in 2017 after it invented Fortnite, which now has more than 350 million players worldwide.
Epic is doing much more than making its own Xbox games, though, its innovation is lifting all boats in the video game ecosystem. You’ve heard of software-as-a-service, how about engines-as-a-service?
Like Roblox, Epic realized the value in “game creation dispersion” but with developers instead of its users.
Epic’s Unreal Engine enables companies to build the video game of their dreams without spending the time and money required to write tedious code, thus removing friction and barriers to entry in game creation.
Do Epic’s ambitions extend beyond consoles and controllers? Some suggest that Epic is building the virtual worlds of the future.
Epic’s latest developer tool, MetaHumans, allows anyone to create hyper-realistic faces, facial animations, and body movements in a matter of minutes. This task used to take months for even the most experienced artists.
Epic has not made official plans for its IPO just yet, but speculation has been rife since it has started building out its Investor Relations division.
#8. Starlink IPO
- Expected IPO Timeline: N/A
- Expected IPO Valuation: N/A
Starlink is a satellite internet project created by SpaceX, the space company founded by Elon Musk was recently valued at $74 billion. The company’s goal is to make internet services available to everyone on the planet.
In typical Elon fashion, he hinted at a Starlink IPO on Twitter: “Once we can predict cash flow reasonably well, Starlink will IPO.”
He continued, “SpaceX needs to pass through a deep chasm or negative cash flow over the next year or so to make Starlink financially viable.”
“Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not.”
Most U.S. households have little choice when they buy Internet service, and some rural homeowners are faced with extreme prices to get Internet – as high as $117,000 for one homeowner in Wisconsin.
Starlink plans to solve this problem at the network level instead of the connection level. Their bandwidth and latency are a function of the number of satellites they launch, and they divide coverage into cells that can span several states.
Starlink has over 1,000 satellites in orbit and about 10,000 users subscribed to its beta testing kit.
The package comes with a tripod, Wi-Fi router, and terminal to connect to the Starlink constellation, which costs $99 per month in addition to its one-time $499 upfront payment.
Completed IPOs in 2021
Affirm is a financial services company that enables consumers to pay for a purchase over time. The company has more than 6.2 million users and has partnered with thousands of businesses like Walmart, Shopify and Peloton.
Affirm went public on January 13, 2021, and originally priced its shares at $49 apiece. However, the stock began trading at $90 per share and got as high as $140 just a month after its offering.
The stock has since cooled off and is trading around $105 per share.
Poshmark is a social commerce marketplace where people in the U.S. can buy and sell new or used clothing, shoes, and accessories. The company makes money by collecting a percentage on each sale.
Poshmark’s stock soared 142% on its first day of trading on January 14, 2021, as its CEO Manish Chandra watched POSH rise from $42 to $101.50.
A month later, the stock has returned to planet Earth and is around $70 per share.
Bumble’s online dating app made history in the dating world for its female-focused algorithm – only female users can make the first contact with matched male users. Bumble joins the small but growing list of female-founded companies to IPO.
Shares of Bumble closed up 64% in their initial public offering on February 11, 2021. The stock is now trading around $70 per share.
Petco, the company with the best ticker name in this article, is a health and wellness company for pets.
The relationship between owners and their pets has changed drastically over the last few decades, as dogs have gone from being kept outside the home to inside and now into the beds of their owners, for example.
Petco shares were priced at $18 per share and rose 44% on their first day of trading before closing at $27.24 per share. The stock is currently trading at $23.
Investing in IPOs
Several risks come with investing in IPOs, and many investors advise to steer clear of them in their early trading days.
Others welcome the IPO mania and call them a once-in-a-lifetime opportunity. Let’s discuss a few pros and cons of investing in IPOs.
Learn More: How to Start Investing
Pros of Investing in IPO Stock:
- Massive potential upside
- Long-term investors can get in on “the ground floor.”
- Traders can capitalize on the volatility
Cons of Investing in IPO Stock:
- Volatile price fluctuations
- Private shareholders sell you their shares at a premium
- Tough to differentiate between the company’s intrinsic value and share price
How to Invest in 2021 IPOs
Unfortunately, retail investors have to wait for the shares to hit the public markets, often at prices much higher than its initial offering price reserved for the private investors who get in on the IPO.
Note that there are differences between these brokers when it comes to account types and ease-of-use.
We recommend trading on Robinhood if you’re trying to benefit from the IPOs volatility and Vanguard or Charles Schwab if you plan on investing in the company long-term, possibly in a tax-advantaged retirement account.
Learn More: Best Online Stock Brokers
How to Research 2021 IPOs
Nobody can help you navigate the IPO terrain better than the Motley Fool. They provide nonstop coverage and insights on the latest IPO news so you can make the best investment decisions possible.
The Motley Fool’s team of analysts and contributors realize that investing in IPOs can be intimidating, and they want to help you.
Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” Listen to Ben and get ready for the next IPO with the Motley Fool.
Learn More: Motley Fool Review
Bottom Line: 2021 IPOs to Watch
From Stripe to Roblox, there are so many exciting IPOs to invest in this upcoming year.
These companies are in all different types of industries, but their cutting-edge technology is riling up institutional and retail investors alike. Buckle up and enjoy the ride.
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