Special Report: IPOs to Watch in 2021

Despite everything else that happened, 2020 was a record year for the IPO market.

2020 started off with very high expectations. The list of potential IPOs for 2020 was long and it included many trendy startups. Back in 2019, I wrote about those IPOs that the market would be anticipating for the following year. 2020 was set to be a huge year with massive gains. Unfortunately, that momentum dwindled quickly in the first few months of the year.

During those first few months of 2020, there was news emerging about a highly contagious virus called COVID-19. People were just starting to learn about it and trying to understand how to tackle it before it spread. It quickly became apparent that governments weren't prepared for a virus like COVID-19. That's when uncertainty began to seep into the U.S. markets as it became clearer that no one was ready for a global health pandemic like the one we were about to experience. It was already too late. The virus began to spread quickly all over the world, and containing its spread became nearly impossible. 

Health experts and governments were learning about the virus and working hard to figure out how they might contain it. Countries throughout the world and most states in the U.S. started to adopt some type of lockdown or stay-at-home orders for their citizens to try to contain the virus and not overwhelm hospitals. These orders essentially shut down economies. Uncertainty of the future was at an all-time high. Those IPOs that were planning to go public put those plans on an indefinite pause. There was no way those companies would be able to raise the IPO proceeds they were expecting if the market was struggling. 

2020 was shaping up to be a year like most of us had never experienced before. And that optimism we'd had earlier in the year was quickly diminished. There was a halt in IPOs with only a few companies braving the uncertainty and going public. It wasn’t until early in the summer that we started to see a shift, with more IPOs coming to market. As coronavirus restrictions lifted, a few companies wanted to test the waters and see how receptive the market would be of IPOs. IPOs from Shift4 Payments (NYSE: FOUR), Agora (NASDAQ: API), Nkarta (NASDAQ: NKTX), nCino (NASDAQ: NCNO), and BigCommerce (NASDAQ: BIGC) were some of the big gainers of the summer that launched the resurgence of the IPO market in 2020. That summer momentum continued into the rest of the year and into one of the busiest Decembers for the IPO market in a while. 

There were over 400 IPOs in 2020. In the last few months of the year, there was an uptick in IPOs. In October, there were 97 IPOs, followed by 41 in November. These months tend to be slower because of the upcoming holiday season and most companies waiting until the next year to go public. Companies weren't waiting around, though, and the IPO market wasn't falling into the familiar pattern with a slow second half of the year. With all that being said, this is why I think it's important to take a look at a few companies that could go public in 2021 and continue this prosperous path that we saw in 2020. 

Bumble

Bumble is a popular, female-focused dating app that’s starting to catch up to the well-known Tinder, one of the many dating apps under Match Group’s (NASDAQ: MTCH) umbrella. Bumble was founded back in 2014, and it’s unique because it requires women searching for heterosexual matches to make the first move. It not only offers dating options but also professional and social networking. Bumble also owns other apps like Badoo, which is a popular dating service outside the U.S. The company hit 100 million users in mid-2020 and is eyeing a first-quarter 2021 IPO. It’s been reported that Bumble has been working with Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) for its public offering and is being advised by Morgan Stanley (NYSE: MS). Dating through apps has become the norm in the past decade, a way to lessen the pressure of meeting someone and finding out if you’re compatible or not. Bumble reported a 26% increase in messages from its app in the early months of the COVID-19 pandemic. As of September last year, Bumble had 66 million users and was profitable with a valuation of $6–$8 billion.

Instacart

Instacart is an online grocery delivery company that was little-known before the pandemic but ended up gaining popularity and success in 2020. The company offers an online marketplace with delivery and pickup services. Instacart is available in 5,500 cities in North America. Although Instacart started out just delivering groceries, it has been able to expand its efforts by working with 150 retailers and offering delivery for 8,000 stores and pickup for 1,500 stores — some of these recently added retailers include Sephora, 7-Eleven, and CVS Health. Valuation raised from $7.9 billion at the beginning of 2020 to more than $17 billion by early October 2020. Instacart plans to expand further in the next few years and is set to grow its retailers to around 500. An early 2021 IPO is expected, and the company completed a funding round that raised about $200 million at the end of October 2020.

Roblox

Roblox is a U.S. gaming platform that has more than 36 million daily active users that are a part of its virtual world. In this world, players are able to create their own games and experiences. The company aims to be one of the first to build realistic avatars that would be a part of a "metaverse," a universe of virtual worlds that are all connected. The company recently acquired Loom.ai to help build up this idea of realistic avatars. The company was planning to go public at the end of 2020 but has postponed its IPO until 2021. Roblox originally wanted to increase its valuation up to $8 billion with the help of its public offering, but a 2021 IPO could put Roblox in a better position and increase that valuation further. The company has gained increased popularity and users because of the pandemic, so waiting could be a better idea for the company. Roblox wants to iron out a few more details before it goes public so it can have a successful public debut and gain all it possibly can. We're expecting an early 2021 IPO from Roblox.

2020 was a strong year for the IPO market even with everything against it, and 2021 could be an equally strong, if not stronger, year for IPOs. Stay tuned.


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