Here is everything you need to know about IPO lockups – what IPO lockups are, why they are crucial, and the typical exceptions to ...
We’ve covered all you need to know about IPOs, how to select the right one, and even the best IPOs to invest in 2020. This guide will help you in your selection process for a potential company to invest in.
IPO stands for initial public offering and refers to a private company’s offering of its shares to the public. As such, outsiders can purchase these shares with hopes that they’ll profit from it. The company generates funds through these sales to reinvest in the business. The investment can be put into marketing, research & development, etc.
A company looking to go public relies on an underwriter that will handle the securities registration of the IPO. The underwriter also serves as a brokerage company that will link investors willing to purchase these shares. However, a potential investor has to meet certain criteria before the brokerage firm qualifies him/her to invest in the IPO.
When it comes to choosing the right IPO, there are certain tips that should guide your selection. And there are also questions you need to ask to ensure you’re well informed even before you deep in your feet.
A major tip is doing a background check on the company to discover its finances, latest developments, and its industry’s health. Your own investigation may reveal so much more compared to relying on the information provided by the private company. Resorting only to what the company reveals to the public can be misleading since such information may be biased.
Another thing to consider is the company’s prospectus. This document reveals the company’s intended plans once it gets the funding. Does it want to channel the money into research, marketing, or generally, promoting its growth? Or does it want to cover debts with the funds? If it’s the latter, then it’s best you stay away from such investment.
Over and above that, questions like how stable the company is and the worth of its stocks when it goes public have to be asked. Let’s take the company’s stability, for instance, you can determine this from looking at its revenue and earnings from the past few years. It’ll help you decide if the business is a growing one and has the potential for more expansion.
Looking for the best IPOs to invest in out there? Then watch the companies outlined below. These companies are strong competitors in their industry, and they’ve made remarkable revenue over the course of the years. Accordingly, they include the following:
Airbnb, Inc. is an American company whose services allow people to make travel bookings, car hire, hotel bookings, and so much more. Specifically, it serves as a broker, connecting individuals and businesses with the actual companies that will offer these services. An instance of this service is linking people willing to rent out their homes with those who are out to get accommodations.
Airbnb has been expanding its business with the potential for more in the next few years. First off, the company purchased HotelTonight, a booking platform, as well as, Gaest.com a space rental platform. Airbnb supports 81,000 cities in 191 countries around the world.
In November 2018, Airbnb hired Dave Stephenson, Amazon’s VP to be its chief financial officer (CFO). The hiring stirred the speculation that the company could be going public in no time. Prior to Stephenson’s hiring, another employee at Amazon had been hired. The latter is Greg Greeley, Amazon Prime’s former VP.
Over and above that, the travel sector has been one of the most impacted by the coronavirus pandemic. There has been a slowdown of travel in the past few months. Hence, it could turn out that Airbnb has chosen not the best time to launch its IPO. However, given the company’s growth the years and potential for more, it is one of the best IPOs to invest in 2020. But then, a date has chosen for the IPO.
Postmates is a U.S based company that was launched in 2011. It helps to deliver already prepared foods and other items from restaurants and stores to people. The food-delivery startup takes advantage of smartphone apps and a GPS system to pair inventories and customer demand.
The name Postmates is often mentioned alongside the likes of Uber Eats, GrubHub, and the likes. It’s no surprise since this company is a tough competitor to either of these. It helps to deliver food, drinks, electronics, and what have you to consumers. Also, Postmates offers its services to users in 3,500 cities in the U.S. and Mexico.
The company revealed in Septemeber 2018 that it has raised $300 million in funding. The funding was led by Tiger Global Management, and at the time, the company gained a valuation of $1.2 billion as a result of the deal.
Initially, 2019 was the expected year for Postmate’s IPO. However, it was not the case as a result of market concerns. According to the company, it was delaying its IPO after seeing the turn out of those from Uber and Lyft. Shares from these companies latter traded significantly less than their initial market price. Nonetheless, there are still expectations that Postmates would launch an IPO soon.
Albertsons Companies Inc. is a U.S. company that was founded in 1939. This is a privately owned company and it is operated by investors such as Cerberus Capital Management.
Albertsons has 2,260 stores as of the 2019’s third quarter as well as 267,000 employees in fiscal 2018. The company also has a valuation of about $19 billion, which ranks it as one of the largest supermarkets in the U.S. Fortune 500 list also ranks the company as the 53rth largest in the U.S based on its revenue.
Over and above that, the company is the owner of grocery chains Safeway and Jewel-Osco. It has merged with Safeway Inc. in January 2015 for $9.2 billion, and before the merger, the company had around 1,075 supermarkets in the U.S.
Unlike some companies that may have not taken the bold step to actualize their plans to launch an IPO, the same cannot be said about Albertsons. In March 2020, the American grocery company filed an S-1 registration statement. The filing was made with the Securities and Exchange Commission (SEC).
Prior to this filing, the company had filed with the SEC in 2015 and 2018. And since then, potential investors have been waiting on the opportunity. Based on the most recent filing, there are plans to offer shares worth $100 million of the New York Stock Exchange.
Robinhood is an American financial services company. It is more of an exchange where people can buy and sell assets like stocks, options, ETFs, and cryptocurrencies. As such, users of the platform can either fall back on its subsidiary Robinhood Financial or Robinhood Crypto depending on the asset to be traded. There is a web page, iOS app, Android app, and Apple Watch which can be used to access the company’s services.
Robinhood also became a promoter of zero trading fees, and all in all, garnered up to 10 million users. Despite the company has not yet presented a timeline or public filing, its CEO, Baiju Bhatt, hinted that Robinhood indeed intends to go public. The potential valuation of the company’s IPO has been set at $7.6 billion.
Wish is a US-based eCommerce platform that was launched in 2010 by the efforts of three men. It is quite unique with its operation. Instead of only connecting buyers with sellers, it links these buyers with manufacturers of products. Sellers can also outline the products they have and offer these products to customers directly. As such, Wish serves as an intermediate between the duo by handling payments instead of stocking physical products.
There are over 1 million merchants on Wish, and the direct sale of their products to consumers takes away the distribution fees. It also helps to cut down the product’s cost for the buyer.
Wish is actively competing with Amazon.com, Inc., a trillion-dollar company, whereas Wish has raised $1.6 billion after its launch in 2010. In August 2019, the company raised $300 million which gave it a valuation of $11.2 billion.
Wish may also launch an IPO soon in a bid to raise more funds and promote its further growth. The IPO valuation is about $11 billion.
Instacart is a U.S. based delivery service company, which was founded in 2012. It offers grocery delivery and other pick-up services to consumers in the U.S and Canada. The company has partnered with about 350 retailers in the U.S. As such, it has links with over 25,000 grocery stores.
Instacart has the backing of Andreessen Horowitz, Tiger Global Management, that contributed $2 billion in Venture Capital funding. Instacart’s IPO is one of many from delivery companies. This company’s IPO valuation is around $8 billion.
DoorDash offers its service in over 4,000 cities and 340,000 stores in the U.S. and Canada. What’s more, the American company is valued at over $13 billion; a valuation that ranks it as the largest third-party delivery service in the U.S. The company has also raised mullions in certain markets.
DoorDash outranked Uber Eats as the second-largest food delivery company based on its food sales. And by March 2019, the company overtook GrubHub based on its total sales.
The company’s valuation and funds raised have given it serious thoughts in listing its shares to be publicly traded in 2020. Specifically, it announced in February 2020, that it has confidentially filed with the SEC to go public. There are, however, speculations that private investors may be the ones selling their shares rather than the company. This means the funds raised won’t go to the company but the insiders. The expected valuation of the IPO is $13 billion.
Asana is a web-based and smartphone application that is used by teams to work more efficiently. As such, this software simplifies the process of team collaboration.
Asana was valued at $1.5 billion as of December 2018. Before that, the company revealed it had raised $1.2 million in an angel round in 2011. And in 2012, it raised $28 million in a Series B round.
Over the course of the years, Asana has launched tools such as Organizations and Calendar View. Its mobile app for iOS and Android devices was launched in 2014 and 2015, respectively.
Asana intends to launch an IPO in 2020 and might adopt a direct listing to do so. The potential IPO valuation sits at $1.5 billion.
Snowflake Inc. is a cloud data storage company. Users of the Snowflake platform are able to store and analyze data. It relies on Amazon web services and it has been the case since 2014. The platform also runs on Microsoft Azure and Google Cloud. Snowflake serves to enable its users to discover and exchange data securely. Forbes 2019’s Cloud 100 list ranked Snowflake as the second-best cloud company globally.
As of late 2018, Snowflake was valued at $3.5 billion after raising $450 million. And later in February 2020, the company raised $479 million, which gave it a valuation of $12.4 billion. Some companies that have backed Snowflake include firms like Sequoia Capital and Iconiq.
Based on this company’s growth and history, its IPO is one of the most potential ones to watch in 2020. According to the company’s CEO in a press conference, the company might go public in the summer of 2020. The CEO, however, noted that some factors could impact on the timing. There are speculations that the IPO valuation of the company could be around $12 billion.
Warner Music Group Corp. (WMG) is a record label company based in the U.S and founded in 1958. It is ranked as the third-largest recording company in the world.
WMG is a multibillion-dollar company with 3,500 employees that operates in over 50 countries worldwide. The company reported a 4% year-over-year surge in revenue in the Q1 of 2020.
Between 2005 to 2011, WMG was a publicly-traded company and its stocks were sold on the New York Stock Exchange. However, it became a private company. In 2020, WMG launched an IPO on Nasdaq which made it a public company again.
WMG also made an S-1 filing with the SEC in February 2020 as part of its plan to launch an IPO. Despite this, there were uncertainties that the IPO will be delayed until there is stability in the market due to the impact of CONVID-19. Recent developments show the company’s shares are priced at $25 per share.
IPOs offer a great way for companies to raise funds for further expansion. It’s also beneficial for investors looking to earn in the long run. Here we provided a list of the best IPOs to invest in that you should keep track of in 2020. And if they are not launched in the current year, you can still note them down since they may still hold something promising for the near future.