In this article, we will take a look at the 11 best IPO stocks to buy now. You can skip our detailed analysis of these IPOs, and go directly to the 5 Best IPO Stocks to Buy Now.
Wall Street has been witnessing a frenzy of initial public offerings (IPOs) for quite some time now. As the global health crisis hit the financial markets in the initial months of 2020, the first half of the year turned out badly for the IPO markets. After a subtle recovery in the economies and the announcement of stimulus packages in June, the IPOs delivered a ground-breaking performance in the second half of 2020, pushing the trend in 2021 as well.
According to a report by Baker McKenzie, in 2020, the IPO activity was recorded highest in a decade with 1,591 listings raising $331 billion across the world. Some of the high-profile companies that debuted on the market in 2020 include Airbnb, Inc. (NASDAQ: ABNB), Snowflake Inc. (NYSE: SNOW), DoorDash, Inc. (NYSE: DASH), and Palantir Technologies Inc. (NYSE: PLTR). The Renaissance IPO Index, an index listing the newly public companies in the U.S., gained 44.07% in the past year, versus 31.7% gains of S&P 500 index.
As 2021 followed the course, many big names launched their IPOs. According to a report by Ernst & Young, the first half of 2021 has seen a 150% annual increase in IPOs, as 1,070 IPOs have raised $222 billion in proceeds.
Some of the big names that went public in 2021 so far include UiPath Inc. (NYSE: PATH), Coupang, Inc. (NYSE: CPNG), Robinhood Markets, Inc. (NASDAQ: HOOD), and Procore Technologies, Inc. (NYSE: PCOR). Coupang, Inc. (NYSE: CPNG) had one of the biggest IPOs of 2021 so far with a $60 billion valuation. The company raised $4.6 billion in its IPO.
Investing in IPOs is somehow beneficial for investors as the initial share price can be of good value. The data collected by an IPO expert Jay Ritter states that in 2020, the average first-day return for IPOs was 41.6%. However, one should not invest blindly in IPO stocks. According to Forbes, only 40% of the IPOs from 1975 to 2011 generated profits five years after they went public, while 60% of them failed to make their mark in the financial market.
Our Methodology:
With this context, let’s analyze our list of the 11 best IPO stocks to buy now. We took into account companies that went public in 2020 and 2021, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks. By “IPO stocks” we mean companies that went public recently.
Photo by Jeremy Bezanger on Unsplash
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11 Best IPO Stocks to Buy Now
11. AppLovin Corporation (NASDAQ: APP)
IPO Date: April 15, 2021
Number of Hedge Fund Holders: 16
AppLovin Corporation (NASDAQ: APP) is a global software company that provides solutions to mobile app developers to grow their apps. Over 9,000 developers are using the company’s software with customers in over 130 countries. AppLovin Corporation (NASDAQ: APP) ranks eleventh on our list of the best IPO stocks to buy now.
AppLovin Corporation (NASDAQ: APP) went public on April 15, 2021, and raised $1.8 billion in its IPO. Though the stock closed down 18.5% from its IPO price of $80 per share on its first trading day, it did hit a high in June, reaching $88.2. In Q2 2021, AppLovin Corporation (NASDAQ: APP) posted revenue of $668.8 million, presenting a 123.4% year-over-year growth. Recently. Morgan Stanley upgraded AppLovin Corporation (NASDAQ: APP) to ‘Equal Weight’, with a $60 price target. The stock has soared 21.6% since its IPO.
As of Q2 2021, 16 hedge funds tracked by Insider Monkey have positions in AppLovin Corporation (NASDAQ: APP), worth $987.9 million.
Like Snowflake Inc. (NYSE: SNOW), Airbnb, Inc. (NASDAQ: ABNB), UiPath Inc. (NYSE: PATH), DoorDash, Inc. (NYSE: DASH), Coupang, Inc. (NYSE: CPNG), and Palantir Technologies Inc. (NYSE: PLTR), AppLovin Corporation (NASDAQ: APP) is one of the notable IPO stocks gaining investors’ attention in 2021.
10. Li Auto Inc. (NASDAQ: LI)
IPO Date: July 30, 2020
Number of Hedge Fund Holders: 20
Li Auto Inc. (NASDAQ: LI) is a Chinese electric vehicle manufacturer, headquartered in Beijing. The company mainly designs, manufactures, and markets premium smart electric vehicles. Its ranks tenth on our list of the best IPO stocks to buy now.
Li Auto Inc. (NASDAQ: LI) went public in July 2020 and raised $1.1 billion in its IPO. The company priced its IPO at $11.50 per share, above its proposed range of $8 to $10 per share. In Q1 2021, Li Auto Inc. (NASDAQ: LI) delivered 12,579 vehicles, presenting a 334% year-over-year growth. The company recently raised $1.5 billion in Hong Kong listing, pricing 100 million shares at HK$118 apiece. In July, Goldman Sachs lifted its price target on Li Auto Inc. (NASDAQ: LI) to $62, with a ‘Buy’ rating on the shares.
As of Q2 2021, 20 hedge funds tracked by Insider Monkey have positions in Li Auto Inc. (NASDAQ: LI), up from 18 in the previous quarter. The stakes are valued at $457.4 million.
Like Snowflake Inc. (NYSE: SNOW), Airbnb, Inc. (NASDAQ: ABNB), UiPath Inc. (NYSE: PATH), DoorDash, Inc. (NYSE: DASH), Coupang, Inc. (NYSE: CPNG), and Palantir Technologies Inc. (NYSE: PLTR), Li Auto Inc. (NASDAQ: LI) is one of the notable IPO stocks gaining investors’ attention in 2021.
9. Compass, Inc. (NYSE: COMP)
IPO Date: April 1, 2021
Number of Hedge Fund Holders: 23
Compass, Inc. (NYSE: COMP) is an American real estate company that uses technology and the internet as a marketing medium. The company has an agent-centric platform with over 20,000 agents who earn a percentage of the selling price.
Compass, Inc. (NYSE: COMP) launched its IPO on April 1, 2021, and raised $450 million. The company priced its IPO at $18 per share, downsizing from its initial range of $23 to $26. In Q2 2021, Compass, Inc. (NYSE: COMP) reported revenue of $1.95 billion, up 185.9% from the prior-year quarter and beating the consensus by $380 million. Recently, Compass Point upgraded Compass, Inc. (NYSE: COMP) to ‘Buy’ with a $20 price target. For FY21, the company expects revenue of $6.15 billion to $6.35 billion. Compass, Inc. (NYSE: COMP) gained 20.3% in the past month.
As of Q2 2021, 23 hedge funds tracked by Insider Monkey have positions in Compass, Inc. (NYSE: COMP), worth $708.4 million. In addition to Snowflake Inc. (NYSE: SNOW), Airbnb, Inc. (NASDAQ: ABNB), UiPath Inc. (NYSE: PATH), DoorDash, Inc. (NYSE: DASH), Coupang, Inc. (NYSE: CPNG), and Palantir Technologies Inc. (NYSE: PLTR), analysts and investors are paying attention to Compass, Inc. (NYSE: COMP) due to the company’s long-term growth potential.
ClearBridge Investments released its first-quarter 2021 investor letter and mentioned Compass, Inc. (NYSE: COMP) in it. Here is what the firm has to say:
“Compass also falls in the software camp. The real estate technology company and brokerage is disrupting the traditional residential broker market with tools that improve operational efficiency for brokers. Their tools have first-mover advantage in the industry and are attracting top brokers from the best markets, resulting in significant market share gains in a short period of time.”
8. Robinhood Markets, Inc. (NASDAQ: HOOD)
IPO Date: July 28, 2021
Number of Hedge Fund Holders: N/A
Robinhood Markets, Inc. (NASDAQ: HOOD) is an American financial services company specializing in commission-free investing via its mobile app which was introduced in 2015. The company has over 21.3 million monthly active users (MAUs), with $102 billion assets under custody.
Robinhood Markets, Inc. (NASDAQ: HOOD) went public on July 28, 2021, and raised nearly $2 billion in its IPO. It sold 52.4 million shares, valuing it at $32 billion. The company now has a market cap of $39.1 billion. After its IPO, Robinhood Markets, Inc. (NASDAQ: HOOD) attracted bullish ratings from Wall Street analysts. Mizuho Securities, KeyBanc, and Citigroup initiated their coverage on Robinhood Markets, Inc. (NASDAQ: HOOD) with a ‘Buy’ rating. Mizuho appreciated the company’s MAUs and the inclination of 50% of all new U.S. retail accounts towards the company. The firm established a $68 price target on the stock. Robinhood Markets, Inc. (NASDAQ: HOOD) soared 33.34% since its IPO.
Like Snowflake Inc. (NYSE: SNOW), Airbnb, Inc. (NASDAQ: ABNB), UiPath Inc. (NYSE: PATH), DoorDash, Inc. (NYSE: DASH), Coupang, Inc. (NYSE: CPNG), and Palantir Technologies Inc. (NYSE: PLTR), Robinhood Markets, Inc. (NASDAQ: HOOD) is one of the notable IPO stocks gaining investors’ attention.
7. Palantir Technologies Inc. (NYSE: PLTR)
IPO Date: September 23, 2020
Number of Hedge Fund Holders: 26
Palantir Technologies Inc. (NYSE: PLTR) is an American software company that specializes in big data analytics. The company has entered into a strategic partnership with a leading automotive technology company, Faurecia, to enhance its efforts towards digital transformation. Palantir Technologies Inc. (NYSE: PLTR) ranks seventh on our list of the best IPO stocks to buy now.
Palantir Technologies Inc. (NYSE: PLTR) launched its IPO in September 2020, 17 years after it was founded. The company started trading at $10, giving it an initial valuation of about $22 billion. In Q2 2021, Palantir Technologies Inc. (NYSE: PLTR) reported an EPS of $0.04, beating the consensus by $0.01. The consolidated revenue stood at $375.6 million, up 49.1% from the prior-year quarter. Recently, Morgan Stanley lifted its price target on Palantir Technologies Inc. (NYSE: PLTR) to $25 from $20. Since the beginning of the year, the stock has delivered a 10.01% return to shareholders, while its 12-month returns are up by 170.6%.
Of the 873 hedge funds tracked by Insider Monkey, 26 funds have positions in Palantir Technologies Inc. (NYSE: PLTR) in Q2 2021, worth $1.36 billion. ARK Investment Management is the company’s leading shareholder with shares worth $808.7 million.
In addition to Snowflake Inc. (NYSE: SNOW), Airbnb, Inc. (NASDAQ: ABNB), UiPath Inc. (NYSE: PATH), DoorDash, Inc. (NYSE: DASH), and Coupang, Inc. (NYSE: CPNG), analysts are paying attention to Palantir Technologies Inc. (NYSE: PLTR) due to the company’s long-term growth potential.
Guardian Fund released its second-quarter 2021 investor letter and mentioned Palantir Technologies Inc. (NYSE: PLTR) in it. Here is what the firm has to say:
“The success of the private sector to innovate in order to help people through the lockdowns and to produce vaccines at record speed at scale has been impressive. The fact that almost every public institution was struggling to be effective no matter how hard some of the people worked, shows the fundamental need of the public sector to become data-driven and invest in data infrastructure.
Government institutions have to partner with enterprises such as Palantir to become digitalnative. The public sector will always struggle to attract the most talented engineers as compensations cannot be justified with tax money and therefore this must be a partnership with specialized private enterprises. This is a great opportunity for Palantir especially as it has already shown to be capable of working with demanding and complex public institutions entrusting it to work on the most critical and sensitive matters.
The news section of Palantir’s website gives insight in where new business is coming from. The main opportunity is in enterprise software and the faster onboarding time and increased self-service of clients is a positive sign. We believe Palantir is becoming one of the more important global software companies.
In addition, Palantir has quietly become a significant investor, investing well over USD 200 million in eight companies. Thereby, it is following the lead of companies like Tencent, Alphabet, and Shopify of establishing valuable investment portfolios.”
6. Procore Technologies, Inc. (NYSE: PCOR)
IPO Date: May 19, 2021
Number of Hedge Fund Holders: 28
Procore Technologies, Inc. (NYSE: PCOR) is an American company that provides services in construction management software. Its platform connects stakeholders in the construction industry through its software built for the specific industry. Procore Technologies, Inc. (NYSE: PCOR) has completed over 1 million projects valued at $1 trillion.
Procore Technologies, Inc. (NYSE: PCOR) raised nearly $635 million in its IPO in May 2021. The stock rose 31% on its first trading day, much above its IPO price. Procore Technologies, Inc. (NYSE: PCOR) sold nearly $9.5 million shares at $67 per share. In Q2 2021, the company posted revenue of $122.7 million, presenting 27.2% year-over-year growth. In August, Canaccord lifted its price target on Procore Technologies, Inc. (NYSE: PCOR) to $110, with a ‘Buy’ rating on the shares. The stock has delivered a 7.29% return since its IPO.
As of Q2 2021, 28 hedge funds have positions in Procore Technologies, Inc. (NYSE: PCOR), worth over $2.08 billion. Like Snowflake Inc. (NYSE: SNOW), Airbnb, Inc. (NASDAQ: ABNB), UiPath Inc. (NYSE: PATH), DoorDash, Inc. (NYSE: DASH), Coupang, Inc. (NYSE: CPNG), and Palantir Technologies Inc. (NYSE: PLTR), Procore Technologies, Inc. (NYSE: PCOR) is one of the notable IPO stocks gaining investors’ attention in 2021.
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Disclosure. None. 11 Best IPO Stocks to Buy Now is originally published on Insider Monkey.
