Very few in the investment community could’ve predicted the market growth we have witnessed over the past 18 months. Aside from the existing companies, new companies have become public, therefore open to investing. New investors have rushed into this growing market through easy-access brokerage accounts such as Robinhood and E*Trade. Subsequently, young investors have begun learning financial and investing literacy. One term that may not have been known but is becoming more common is the IPO, or initial public offering. An IPO “refers the process of offering shares of a private corporation to the public in a new stock issuance“ (Fernando). 2021 alone has produced 777 IPOs to date, up from 480 in 2020. Popular IPOs over the last couple of years include DoorDash (DASH), Airbnb (ABNB), and Zoom (ZM).
Before investing in IPOs, it is important to consider the inherent risk involved. Jennifer Rudden wrote her recent article on statista.com, “The share of U.S. companies that were profitable after their IPO has been falling since a decade high of 81 percent in 2009. In 2020, this figure had dropped to only 22 percent” (Rudden). While the most profitable IPOs tend to dominate the news headlines, investors should proceed with caution while adding new publicly traded companies to their investment portfolios. This may mean limiting oneself to a small percentage of total portfolio value or dedicating a small, individual brokerage account to investment philosophies geared more towards higher risk and return.
With that said, below is a list of upcoming IPOs the investment community may look to add to their existing portfolios in the coming months.
1. iFit Health and Fitness:
Fitness equipment manufacturer offering additional interactive health and fitness platforms
Recent company valuation: $7 billion
2. Rivian
Electric vehicle manufacturer
Recent company valuation: $80 billion
3. Allbirds
Footwear company focused on renewable materials, sustainability, and comfort
Recent company valuation: $1.7 billion
4. Instacart
App-based delivery service that creates a network for delivering groceries and other products
Recent company valuation: $39 billion
References:
Fernando, Jason. “Initial Public Offering (IPO) Definition.” Investopedia, Investopedia, 27 Sept. 2021, https://www.investopedia.com/terms/i/ipo.asp.
Rudden, Jennifer. “Topic: IPOs in the U.S.” Statista, 30 Sept. 2021, https://www.statista.com/topics/1272/ipos/.
Taulli, Tom. “13 Hot Upcoming IPOs to Watch For in the Rest of 2021.” Kiplinger, 23 Sept. 2021.