2021 was a record year for initial public offerings. According to Forbes, roughly 2400 companies went public in 2021 and raised $453 billion. In the United States, 1,100 companies went public and raised roughly $260 billion. Some of the highest-valued IPOs of 2021 were Roblox Corporation (NYSE:RBLX), Coinbase Global, Inc. (NASDAQ:COIN), Rivian Automotive, Inc. (NASDAQ:RIVN), and Robinhood Markets, Inc. (NASDAQ:HOOD).
However, 2022 was marred with ever-increasing inflation, supply chain challenges, rate hikes, and geopolitical tensions. That’s why IPO activity is slowing down. According to Ernst & Young, IPO activity in the Americas region experienced a massive decline in the second quarter of 2022, with deals dropping 73% year over year, and proceeds falling 95% year over year. According to Rachel Gerring, EY Americas IPO Leader, IPO activity in the Americas region is going through a slowdown due to macroeconomic headwinds which are perpetually impacting the performance and valuation of companies. Rachel Gerring noted that companies are currently in a “wait-and-see” period.
Rachel Gerring was featured on Yahoo Finance Live where she spoke about the current slowdown in the IPO market. Here are some of her important comments:
Companies are pausing and taking stock of just what’s happening across the broader market and navigating through the choppy waters of rising interest rates, inflation & recessionary fears, ongoing geopolitical instability, and supplies chain shortages, workforce shortages, high volatility, and then we can’t forget the performance of the 2021 IPO class, that certainly makes it difficult…
Right now companies are taking this time to be inward-focused. Looking and challenging their business, really shoring up key functions in that public company readiness arena, forecasting abilities, and so forth, and waiting it out. I think right now investors are focused on both growth and profitability or at least a clear path to profitability. I see in the last half of this year, and into 2023, companies that can convey both growth and profitability as opposed to growth at all costs, that we saw in 2021.
I think there’s a lot of opportunities for companies to explore access to capital. Certainly, IPOs can be used as a funding mechanism and that’s what’s going to really dictate when companies ultimately do or don’t come to the market based on you know their funding needs, liquidity, and then overall just objectives that they have. So there are options out there in the market for them, both on the private side and then the public side, and I think companies are carefully just evaluating all of those options they have and then what’s the right timing for them.
I think right now what’s gonna launch, or what entrants we’re gonna see first, again are those companies probably more in the defense sectors, the consumer staples, and so forth. And again, both growth and profitability, I think are going to be the companies that we see coming to market most earlier driving that investor focus, and hopefully we continue to see an uptick from there.
As companies sit out the “wait-and-see” period and market conditions improve, we can anticipate seeing successful public debuts in the latter half of 2022.
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Our Methodology
To determine the 10 hottest upcoming IPOs to watch in 2022, we reviewed private companies that are attracting investors’ attention and have recently conducted successful funding rounds. Along with each company, we have mentioned its business fundamentals, news related to its most recent funding round, and the potential valuation the company is seeking to go public. We have arranged our picks in increasing order of potential valuation.
10 Hottest Upcoming IPOs to Watch in 2022
10. Impossible Foods
Potential IPO Valuation: $7 Billion
Expected Date of IPO: Second Half of 2022 or Early 2023
Impossible Foods offers plant-based alternatives for meat products. As consumers adopt healthy eating trends, organic food companies are gaining traction. In July 2016, the company launched the Impossible Burger, which sparked the interest of consumers and fast food giants alike. In 2019, Burger King favored Impossible Foods over Beyond Meat to become its supplier for plant-based burgers. The company also makes plant-based sausage and chicken products. In 2021, Burger King announced that it will be testing Impossible Foods’ meatless nuggets.
In November 2021, Impossible Foods raised $500 million in a funding round led by Mirae Asset Global Investments. This brought the company’s valuation to $7 billion and its funding total to $2 billion. The company was expected to IPO in the early half of 2022 but delayed doing so due to increased stock market volatility. Impossible Foods has grown impressively. In 2021, the company reported that its retail sales grew 85% year over year. As of 2022, the company’s products are available in 20,000 grocery stores and 40,000 restaurants.
9. Airtable
Potential IPO Valuation: $11 Billion
Expected Date of IPO: Second Half of 2022
Airtable is a cloud-based software company that offers a low-code platform that allows for creating and sharing of relational databases. The company was founded in 2012 by Howie Liu, Andrew Ofstad, and Emmett Nicholas, and is headquartered in San Francisco, California. The company’s cloud platform has grown popular among users because of its user-friendliness. Airtable is ranked sixth on the Forbes Cloud 100 list. Some of the biggest companies in the world, such as Netflix, Inc. (NASDAQ:NFLX) and Shopify Inc. (NYSE:SHOP), are using Airtable’s platform to handle their business needs.
In December 2021, Airtable raised $735 million via a funding round and grew its valuation to $11 billion, roughly double its valuation from the beginning of 2021. The company raised approximately $1.4 billion in 2021. After the successful funding round, Airtable’s CEO, Howie Liu told CNBC: “This bridges us to profitability and allows us to time an IPO at the time that’s ideal for us as a company,”. Although the date is not disclosed, Airtable is expected to go public in the latter half of 2022 according to media reports.
8. Reddit
Potential IPO Valuation: $15 Billion
Expected Date of IPO: Second Half of 2022
Reddit is an American social news website where individuals can post content in the form of links, text posts, images, and videos. Users can vote on posts and have discussions via comments. Posts are categorized into user-created boards called “communities”. Posts that receive more upvotes are moved to the top of the page.
Reddit rose to prominence when a group of retail investors, members of WallStreetBets, initiated a short squeeze in 2021 and bought shares of GameStop Corp. (NYSE:GME) and AMC Entertainment Holdings, Inc. (NYSE:AMC) aggressively. As of 2022, the platform has 1.5 billion registered users, and over 400 million active monthly users. Reddit was founded in 2005 by Steve Huffman, Aaron Swartz, and Alexis Ohanian.
Reddit has been actively growing its valuation. In February 2019, the company raised $300 million and brought its valuation to $3 billion. In 2021, the company raised $700 million through a funding round led by Fidelity Investments and brought its valuation to roughly $10 billion. In December 2021, Reddit announced that it plans to go public at a valuation of $15 billion. Bloomberg reported that the company hired Morgan Stanley and Goldman Sachs to be the lead underwriters for the IPO.
Reddit is one of the most anticipated IPOs of 2022. Some of the most hyped IPOs of 2021 included Rivian Automotive, Inc., Roblox Corporation, Robinhood Markets, Inc., and Coinbase Global, Inc..
7. Discord
Potential IPO Valuation: $15 Billion
Expected Date of IPO: Second Half of 2022 or Early 2023
Discord is a free voice, video, and chat platform which allows instant communication. Users can communicate over Discord servers. The platform is compatible with Windows, macOS, Android, iOS, and Linux. The app rose to prominence during the COVID-19 pandemic and was initially used more commonly by gamers. Today the platform allows for various communities, other than gamers, to share and exchange information on various topics.
In 2021, Discord’s monthly active users grew 40% and reached 140 million. The explosive growth of Discord’s user base led to acquisition offers by Microsoft Corporation (NASDAQ:MSFT) and Twitter, Inc. (NYSE:TWTR). In 2021, Microsoft Corporation (NASDAQ:MSFT) made an offer to acquire Discord for $10 billion. Discord rejected the offer, which Microsoft Corporation raised to $12 billion. In September 2021, Discord raised $500 million in a funding round and brought its valuation to $15 billion, two times its valuation of $7.3 billion in 2020.
Discord has not announced that the company plans to go public, yet. However, it is focusing on recruiting top talent and strategic M&A. In March 2021, the company announced that it has hired its first finance chief, Tomasz Marcinkowski, former head of finance at Pinterest. In July 2021, Discord acquired Sentropy, a company that builds AI systems to safeguard communities across the internet from abuse, harassment, and malicious content. In June 2021, the company acquired Ubiquity6, an AR company that leverages computer vision to create immersive multiplayer experiences.
6. Instacart
Potential IPO Valuation: $24 Billion
Expected Date of IPO: Second Half of 2022
Instacart is an American company that offers grocery delivery and pick-up services in the United States and Canada. The company’s growth skyrocketed during the pandemic as consumers resorted to home delivery services to shop for groceries. Instacart added 300,000 drivers between March and April of 2021 to meet the demand surge fueled by the pandemic.
In March 2021, Instacart raised $265 million in a funding round and brought its valuation to $39 billion. The round was led by Andreessen Horowitz, Sequoia, and D1 Capital Partners among other institutional investors. However, as the world reopened and people started heading out, Instacart experienced a slowdown. In March 2022, Instacart slashed its valuation by 40%, bringing it to $24 billion.
On May 11, 2022, Instacart announced that it has confidentially filed for an IPO with the SEC. The company has been growing its operations and seeking strategic acquisitions by which it can maintain its leading position. In October 2021, Instacart announced that it has acquired Caper AI, an AI company that develops smart checkup devices. Caper AI designed a shopping cart that uses computer vision to identify objects and automatically bill them as they are placed in the cart.
Instacart IPO could gain a lot of attention and the company can become a notable growth stock like Rivian Automotive, Inc., Roblox Corporation, Robinhood Markets, Inc., and Coinbase Global, Inc..
5. Chime
Potential IPO Valuation: $25 Billion
Expected Date of IPO: Second Half of 2022
Chime is an American fintech company that provides fee-free mobile banking services. Chime does not charge monthly or overdraft fees, and also does not have traditional banking requirements such as an opening deposit or minimum balance to open a free checking account. The company was founded by Chris Britt and Ryan King in 2012 and is headquartered in San Francisco, California.
Chime has been seeking strategic M&A to grow its operations. In 2018, Chime acquired Pinch, a company that provides services for people to enhance their credit scores by timely reporting of rent payments to credit bureaus. In August 2021, Chime acquired Charlie Finance, a financial services start-up that helps individuals track and manage their debt.
Chime is among the hottest upcoming IPOs in 2022. The company had a successful funding round in August 2021 and raised $750 million, bringing its valuation to $25 billion. The company was expected to IPO in the first quarter of 2022. However, Chime delayed its plans to IPO and said that it will have a public debut in the second half of 2022 as the company is working on adding new features related to lending and investing to its platform.
4. Epic Games
Potential IPO Valuation: $31.5 Billion
Expected Date of IPO: Second Half of 2022 or Early 2023
Epic Games is a leading American video game and software company that is most famous for Fortnite. The company was founded in 1991 by Tim Sweeney and is headquartered in Cary, North Carolina, with over 40 offices worldwide. Epic Games has released a range of successful titles over the years, including the Gears of War series, Infinity Blade, and Bulletstorm.
Epic Games is a major player in the video game industry and is also hyperactive in the building of the metaverse. In April 2022, Epic Games announced that it has raised $2 billion from Sony and Kirkbi to build the metaverse, bringing its valuation to $31.5 billion. The company has raised approximately $4.4 billion since its founding.
3. Databricks
Potential IPO Valuation: $38 Billion
Expected Date of IPO: Second Half of 2022
Databricks is an American enterprise software company that provides solutions for data engineering, data science, and business analytics. Databricks also offers a platform for machine learning, data storage & processing, streaming analytics, and business intelligence. The company was founded in 2013 and is headquartered in San Francisco, with operations in Canada, the United Kingdom, the Netherlands, Singapore, Australia, Germany, France, Japan, China, India, and Brazil.
In February 2022, Bloomberg reported that Databricks has raised $3.5 billion via funding rounds led by Morgan Stanley, Franklin Templeton, Amazon Web Services, and Andreessen Horowitz among other investors, bringing its valuation to $38 billion. Databricks is among the most valuable startups in the world and has over 7000 corporations across the globe using its platform.
2. Mobileye
Potential IPO Valuation: $50 Billion
Expected Date of IPO: Second Half of 2022
Mobileye develops autonomous driving technologies and advanced driver-assistance systems including cameras, computer chips, and software. The company went public in 2014 and was acquired and taken private by Intel Corporation (NASDAQ:INTC) in 2017 for $15.3 billion, roughly 3 times its IPO value. The company has collaborated with BMW, Volkswagen, General Motors Company, and Ford Motor Company, and integrated its technologies into their vehicles.
Mobileye was a successful investment for Intel Corporation. In 2021, Mobileye accounted for $1.4 billion of Intel Corporation’s (NASDAQ:INTC) annual revenue, up 43% year over year. In December 2021, Intel Corporation announced that it plans to take Mobileye public for a valuation of $50 billion in the middle of 2022.
1. Stripe
Potential IPO Valuation: $74 Billion
Expected Date of IPO: Second Half of 2022
Stripe, Inc. is an Irish-American financial services company that develops and offers payment processing software and APIs for e-commerce and mobile applications. The company was founded in 2010 and has two corporate headquarters, one in San Francisco, United States, and the other in Dublin, Ireland.
The pandemic fueled online shopping, which was positive for Stripe. For 2021, the company reported gross revenue of roughly $12 billion, up 60% year-over-year, and net revenue of approximately $2.5 billion. The company was also EBITDA profitable.
In March 2021, Stripe raised $600 million from funding rounds led by Ireland’s National Treasury Management Agency and Fidelity Investments. The company was valued at $95 billion after the round. However, due to a sell-off in tech stocks in early 2022, the company slashed its internal valuation by 28%, bringing it to $74 billion in June 2022.
You can also take a look at 10 Most Successful Tech IPOs of 2021 and 10 Most Anticipated IPOs of 2022.
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This article is originally published at Insider Monkey.