Special Report: 2022 IPO Outlook

The 2021 IPO market has been massive. It’s been another record-breaking year.

According to Renaissance Capital, the market is expected to witness some 375 deals in 2021 while raising close to $125 billion. 

This would mean that 2021 would have exceeded the $97 billion raised in 2000 during the dot-com boom. 

It's been a busy year for companies going public. 

The Nasdaq continues to be the leading U.S. exchange for technology, consumer, and healthcare IPOs. The president of the Nasdaq, Nelson Griggs, had this to say about 2021’s robust year of IPOs and SPACs:

It’s been a record-breaking year for U.S. initial public offerings, with many significant milestones for Nasdaq that include welcoming the largest direct listing in history and Honeywell, a Dow 30 company. We’re proud to offer companies more tracks to join the public markets and reach investors, and we are continually enhancing existing as well as innovating new ways through developments in IPOs, direct listings, and SPACs.

In a recent interview about what to expect for the rest of 2021, Renaissance Capital’s Kathleen Smith said:

We expect to end the year with another 100 IPOs… which will be a record compared to anything we’ve seen since the internet bubble in 2000, and we’re thinking it’ll be about another $30 billion raised.

Adding another $30 billion to an already-robust year for the IPO market would be astounding.

As we expect the 2021 IPO market to end with a bang, it’s time we take a sneak peek at what’s expected for 2022’s IPO market and a few companies that have been contemplating their market debuts in the upcoming year.

Instacart 

Instacart offers its grocery delivery and pickup service within the U.S. and Canada through its website and mobile app. The company was founded in 2012 and has said it’s created more than 186,000 grocery jobs and contributed to increasing U.S. grocers’ revenue by $6.4 billion. 

Over the past year, Instacart has experienced massive growth, mostly from the coronavirus pandemic and the increase in demand for its services. People were using Instacart to have their groceries delivered as concerns and uncertainties about the virus continued to spread. They were afraid or uncomfortable with going to stores and didn’t want to get caught up in the chaos and panic-buying.

The increase in demand for Instacart's services helped the company record its first monthly profit in April 2020 — earning $10 million. For 2020, it generated $1.5 billion in revenue and $35 billion in sales. 

In March 2021, the company was able to raise $265 million, which put its valuation near $39 billion. Instacart estimates that it has about 9.6 million active users and over 500,000 shoppers (the ones who pick up a customer’s items). 

Instacart has yet to file its IPO documents with the SEC, but as soon as it does, there will most likely be massive investor demand for this IPO. In these IPO documents, the company will need to map out how it expects to continue its growth in a post-pandemic world, especially when the company could see a decrease in demand for its services.

Discord

Discord is a software company that offers app-based services that were launched back in 2015. Its services focus on ways for users to communicate with each other through video calls, voice calls, text messages, media, and files in private chats. It has become an easy way for friends and gaming communities to communicate with each other, especially during the COVID-19 pandemic. 

As of September 15, 2021, Discord raised $500 million in a recent funding round — putting the company’s valuation near $15 billion, which is more than double its December 2020 valuation of $7 billion. It has reported more than 150 million monthly users and was able to earn a revenue of $130 million for 2020.

Discord makes its money through its subscription packages, which are supplemental to its free core product. The paid service is priced at $9.99 a month and gives users enhanced features like global emoji use, improved streaming, screen sharing, and increased upload limits, just to name a few. The company also has a cheaper paid service for $4.99 a month, which covers a limited selection of what is offered in its $9.99 subscription.

Some of the company’s investors include Dragoneer Investment Group, Baillie Gifford, Coatue, Fidelity Management & Research, and Franklin Templeton.

Stripe

Stripe is an Irish-American company that offers financial services and software as a service (SaaS). It was founded back in 2009 and has dual headquarters in San Francisco and Dublin, Ireland. It processes payments for e-commerce businesses. 

The e-commerce industry has taken off in the past few years. More and more payments are occurring online through digital storefronts. And physical storefronts and restaurants are turning to new ways to process payments, like through new point-of-sale (POS) systems from payment companies that make it easier for both businesses and consumers to sell and buy.

According to a report by JPMorgan, "Business-to-consumer e-commerce sales are worth $744.1 billion, and online sales growth in the U.S. is expected to reach a compound annual growth rate (CAGR) of 10.2% in 2021."

There is plenty of growth in this industry, and the U.S. hasn’t even reached its full potential.

Stripe’s most recent round of funding for the company left it with a very impressive valuation of $100 billion, not to mention the massive Canadian e-commerce company Shopify (NYSE: SHOP) has taken an interest in Stripe and has invested more than $350 million in the company.

Shopify has become one of Stripe's biggest supporters and one of the company’s largest payment-processing customers. 

Earlier this year, Shopify introduced bank accounts and debit cards to its merchants through a Stripe program. These two companies have a cohesive partnership that could continue after Stripe’s public debut. This also gives Stripe even more credibility throughout the e-commerce industry. 

Stripe can make money by charging its customers a swipe fee of 2.9% plus $0.30 for every transaction it processes.

And Shopify isn’t Stripe’s only big-name client. Some of the companies that use Stripe’s platform include Amazon (NASDAQ: AMZN), Slack (NYSE: WORK), Glossier, and Under Armour (NYSE: UA). On top of that, the company’s early investors include Peter Thiel and Elon Musk. 

An IPO from Stripe is going to be one to watch out for, and it looks like it could be ready to go public in 2022. 


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