The IPO market finally loosened up in late 2023, following one of the worst periods for debuts in more than a decade. Rapidly rising interest rates – thanks to an aggressive Federal Reserve fighting inflation – put the market on edge in 2023 and 2023, dampening the risk appetite essential for a strong IPO market. With investors anticipating the Fed’s completion of raising rates and the potential for a so-called “soft landing” for the economy, the IPO market has heated up.
According to Renaissance Capital, some 108 companies conducted their IPOs in 2023, raising $19.4 billion. These numbers rose significantly from the doldrums of 71 IPOs in 2023 and just $7.7 billion raised. But 2023 was the worst year for IPOs since at least 2010, so last year’s strong rebound comes from a much lower base, with much of the increased volume in the second half of the year as the Fed moved away from IPOs . the brake of higher interest rates.
Many market watchers foresee an environment that may become more favorable for more activity.
“Looking ahead, the consensus within financial circles points to a shift towards more stable market conditions reminiscent of the relatively quiet years of 2018 and 2019,” said Akshata Bailkeri, head of research at EquityZen, a secondary equity market. “A more stable market could provide a supportive environment for companies looking to go public.”
Renaissance expects a “continued recovery” in IPOs through 2024, but acknowledges that “the IPO market recovery is still somewhat weak.” The ever-sensitive market could close the funding window if conditions worsen, for example if the economy is clearly sliding into recession.
Here are some of the most anticipated IPOs for 2024.
7 popular IPOs to look forward to
1. Stripe
Stripe’s e-commerce payment processing business follows the surge in online shopping, which is gaining momentum during the pandemic. The company has major supporters in the form of venture capital firms Andreesen Horowitz, Kleiner Perkins and Sequoia Capital, and achieved a high valuation of $95 billion in 2023, although a $6.5 billion raise in March 2023 valued the company at just $50 billion. Rumor has it that Stripe has been on the IPO train for a while.
2. Databricks
Databricks is a tech unicorn that has the potential to become an IPO worth tens of billions, and therefore one of the most notable offerings in each year it goes public. The cloud-based data infrastructure company was valued at $38 billion in 2023, and while that figure was reduced to $31 billion in October 2023, a fundraising round in September 2023 increased the valuation to $43 billion. Rivals include recent IPOs Snowflake and Confluent. Databricks has a number of top investors, including Andreesen Horowitz, BlackRock, Tiger Global and Fidelity.
3.Reddit
The so-called ‘front page of the internet’, Reddit, runs one of the most popular websites for engaging in discussions with people who share similar interests and hobbies. The company confidentially filed for an initial public offering with the Securities and Exchange Commission in December 2023, but a lack of profitability has kept the company on the sidelines until now. Labor issues and concerns about the use of AI data can also leave investors waiting and shortchanged. Reddit’s valuation has been downgraded by investors from its $10 billion valuation in August 2023, but the company is reportedly aiming for a valuation as high as $15 billion for a 2024 debut, according to Bloomberg.
4. Panera bread
Panera Bread may finally be ready to come out of the oven after being acquired by private equity firm JAB Holding in 2017. The bakery-restaurant chain has dropped hints that it is interested in an offering, particularly as part of a CEO change in May 2023. JAB already tried to take Panera public via a SPAC in 2023, but the deal was called off. Now that the company has been in ownership for six years, the company may be starting to get a little stale for the private owners. Panera was an investor favorite for years before the acquisition, and growing restaurant franchises are among the hottest investments on Wall Street, so Panera will likely become a popular name once it emerges.
5. Foams
Skims, a shapewear and clothing company co-owned by media celebrity Kim Kardashian, may also be ready for its public market debut this year. The company has raised a total of $670 million from investors, valuing the company at $4 billion at its last funding round in July 2023. The company estimated sales growth to be around 50 percent by 2023, and its previously online-only business is looking to make a big splash in brick-and-mortar retail, with flagship stores in New York and Los Angeles. With the Kardashian name behind it, Skims stock could make an initial public offering.
6. Shein
Shein is likely to be the largest IPO in 2024 – even one of the ten largest US IPOs ever – and has already filed confidential documents with the SEC to make an offer. The Chinese fast-fashion company was valued at $66 billion in 2023, but is targeting a valuation of $90 billion for the IPO, according to Bloomberg. Hitting the high end of that range would put the company’s debut at the second-highest spot of all time. These valuations may require sensational operating performance to sustain them, but the company grew more than 40 percent year-over-year to $24 billion in the first three quarters of 2023, so it’s a growth monster.
7. Call financial
Chime offers a financial app that acts like a bank and offers free accounts for customers. It’s also a hit with consumers, boasting more than 14.5 million active users by 2023, according to Forbes. There has been speculation for years that Chime would go public, but it is still private and looking for the right time to debut. Chime’s high valuation was $25 billion at the end of 2023, and initial reports had it IPO priced at an even higher valuation. However, given the decline in valuations of many technology stocks in 2023 and 2023, it is reasonable for investors to expect a decline in prices.
In short
After an improving but still subdued IPO market in 2023, the funding window for new public companies could improve this year, especially if the overall economy remains mild. But if the economy slows significantly in 2024, it could mean a third straight year of low IPO volume.
