What Can We Still Expect From the 2021 IPO Market?
It’s been a record-breaking year for the IPO market.
According to recent data from Renaissance Capital, proceeds from U.S. IPOs have reached $89 billion in 2021 — a 232% increase from the same time last year. Renaissance Capital also made note of how the 2021 IPO market is on track to surpassed the full-year all-time record high of $97 billion raised back in 2000.
Matthew Kennedy, a senior IPO market strategist at Renaissance Capital, had this to say about 2021’s IPO market:
The valuations companies can get in the IPO market are high, historically. We attribute much of it to a decades-long buildup of unicorns and VC funding.
These companies that delayed going public have now been going public because the IPO market has been booming despite the COVID-19 pandemic and many market uncertainties. 2020 could have easily been a terrible year for the IPO market, but it was far from it. It had a busy second half of the year, and for the full year there was a total of 480 IPOs (including SPACs).
I was a little shocked at how robust 2020 actually was. I’ve been following the IPO market for years and the second half of the year tends to be slow and dull, but there were strong IPOs up until December.
2020 definitely set the stage for 2021’s IPO market, but I don’t think that 2021 was expected to be as strong as it has been.
So far in 2021 there have been 682 IPOs (including SPACs), surpassing the total number of IPOs in 2020 — and there are still four months left in the year. Most of the IPOs did come from SPACs, and since the beginning of the year we have started to see a slowdown when it comes to the SPAC market.
What Does the Rest of the Year Look Like?
Data from Barclays show that after a record first quarter, SPAC issuance fell 87% in the second quarter as efforts for regulation on SPAC deals increased. This means we’ll most likely see the total number of IPOs, which includes SPAC deals, decrease significantly, but that doesn’t mean the IPO market boom is over.
So far in August, there have been a few IPO postponements from companies, and even this week there are far fewer IPOs expected than what we experienced last month, but I don’t believe that’s something to be worried about.
Last month, there were sometimes over 10 IPOs in one week, so when we’re seeing half of that or even less, it could lead you to believe that the rest of the year is going to experience a slowdown.
I think we are just finally experiencing the typical summertime slowdown. Traditionally for the IPO market, a summer slowdown usually happens from mid-August until Labor Day or the week after. There is still a lot to look forward to for the rest of 2021 and the IPO market.
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Here are two IPOs that are expected to go public in the next few months.
Two IPOs to Look Out for in 2021...
1. Authentic Brands Group
Authentic Brands Group was created in 2010 by Jamie Slater, who invested his own money ($20 million) into the company. The company focuses on acquiring struggling businesses like Aeropostale, Barneys New York, Brooks Brothers, Eddie Bauer, Forever 21, Nautica, and Nine West.
It has also acquired Sports Illustrated and the intellectual property of celebrities like Marilyn Monroe, Muhammad Ali, and Elvis Presley. Not to mention, Authentic Brands Group has partnered with mall giants like Simon Property Group and Brookfield Property Partners.
The company has recently filed its S-1, which indicates that Authentic Brands Group has had a strong increase in growth. From 2016–2020, its revenues increased at a CAGR of 31%. to $489 million. The company is expected to go public in August and is aiming toward a valuation of $10 billion. It is expected to list on the NYSE with the ticker symbol “AUTH.”
Discord is a online chat platform where users communicate via voice calls, video calls, text messaging, media, and files in private chats. The platform was initially created for people to have a place to communicate with friends around the world while playing games. The platform gained its popularity with gaming communities on Twitch and Reddit.
Discord is estimated to have an IPO valuation of more than $10 billion. In 2020, the company announced that it plans to expand beyond gaming, and it already raised $100 million last year to help with these efforts of expansion, putting the company at a valuation of $7 billion.
Because of the COVID-19 pandemic, people spent more of their time indoors and continue to do so, which has had a positive impact on Discord and has increased its user base.
Its monthly active users (MAUs) doubled in 2020 to 140 million. Its revenue also increased from $45 million to $130 million.
There have been some rumors of attempts to acquire Discord. According to a Wall Street Journal report, Microsoft was interested in acquiring Discord for at least $10 billion, but the deal ended up falling apart. Discord hasn't filed an S-1, so there are still few details on when the company might go public and what to expect if it does.
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Until next time,
Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
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