The number of technology companies going public has increased in recent months amid the coronavirus pandemic. Some of the most popular companies that have gone public recently are Snowflake, Asana, JFrog, GoodRx, and Palantir Technologies. Yet, more tech firms are expected to go public in the coming few months as the stock market continues being supported by low interest rates. Here are the 5 top upcoming tech IPOs to watch in the coming months.
Airbnb
Started in 2008, Airbnb has become one of the biggest technology startups in the world, with an estimated value of more than $20 billion. The company has raised more than $5.1 billion from venture capital firms like Kleiner-Perkins, Sequoia, Morgan Stanley, and T-Rowe Price.
Since Airbnb is privately-owned, it does not publish its quarterly earnings. However, according to Bloomberg, the company’s revenue in the fourth quarter of 2019 rose by 32% to more than $1.1 billion. Like many other fast-growing companies, it increased its loss to more than $274 million.
However, because of the pandemic, its business has been among the worst-affected since most people were forced to cancel their trips. Indeed, according to Brian Chesky, the company has lost more than $1 billion during the pandemic.
Still, investors believe that the company will bounce back once the pandemic eases and when vaccines pass clinical trials. Better, analysts believe that its focus on leisure travels – instead of business travel – will help it bounce back faster.
So, will it make sense to invest in Airbnb? First, the company has a substantial market share in the vacation rental industry. Second, it will emerge from the pandemic as a leaner and cost-focused company. And finally, there will be more demand for its services because its rooms tend to be cheaper than hotels.
Instacart
Instacart is a company that focuses on grocery delivery services in the United States and Canada. The company employs more than 500,000 freelancers who shop and deliver groceries and other items to people. It is available in most American retailers like Walmart, 7-eleven, Hannaford, and Vitamin Shoppe.
Instacart is one of the biggest technology companies, having raised more than $2.4 billion from investors like T-Rowe Price, Sequoia, and Andreessen Horowitz. In its latest funding, the company raised ~$200 million at a $17.7 billion valuation.
Because of its business model and the shift to online grocery shopping, Instacart has become one of the biggest beneficiaries during the pandemic. According to the Financial Times, its total order volume rose by 274% in August.
However, while Instacart has made a lot of progress, it has some risks. For one, it is battling a new law in California that would allow it to classify its freelancers as workers. Also, other freelancer-based startups like Uber and Lyft have struggled as public companies.
SpaceX
Space Exploration (SpaceX) is one of the fastest-growing technology startups that is disrupting the space industry. Started in 2002 by Elon Musk, the company builds reusable rockets and spacecraft.
Over the years, SpaceX has managed to become one of the most efficient companies in the industry. For example, the company is able to launch satellites at just $62 million. In contrast, a company like United Launch Alliance charges an average of $186 million to launch.
As a result, investors have been optimistic about the firm. Investors like Founders Fund, Rothenberg Ventures, and Troy Capital have provided more than $5 billion, giving it a market cap of more than $46 billion.
Investing in SpaceX will have several benefits to investors in the public market. First, the company has already proven itself in the launching industry. Over the years, it has had no major accidents. Second, it has dependable long-term customers like Nasa and other space companies. Third, it is continually reducing the cost of launching its programs as it gears towards taking people to space.
Fourth, it has a visionary leader, who has led other companies like Tesla and PayPal. Finally, the market potential for the space industry is enormous. Indeed, researchers estimate that the industry will reach more than $558 billion by 2026.
Stripe
Stripe is a fintech company that enables companies to receive payments through the internet. The firm was started in 2010 and has raised more than $1.7 billion at a $36 billion valuation. Some of its investors are Playfair Capital, Y Combinator, and Founders Fund.
Stripe is widely-used across the world. It helps companies like Google, Amazon, Zoom, and Shopify handle billions of dollars every day. It also helps millions of startup firms to handle their payments. The company recently made headlines when it acquired Paystack, a Nigerian payment company, for more than $200 million.
Stripe has not announced when it will go public. However, analysts believe that this will happen in the next few months.
Fortunately, the payment industry is one of the fastest-growing industries, making Stripe an ideal company to invest in when it goes public. Indeed, recently, we have seen companies like PayPal, Square, and Ant Financial become some of the biggest firms in the world.
Stripe has several benefits. First, it is incorporated in some of the most popular platforms worldwide, like Zoom and Uber. Unless it makes a big blunder, these companies will not abandon the platform. Second, it is relatively easy to install, which makes it ideal for many startups. Finally, it has relatively high margins.
Robinhood
Robinhood is a financial services company that has successfully disrupted the stock brokerage industry. It has done that by allowing people to buy and sell stocks for free. As a result, it has changed the industry by pushing other traditional brokerages to bring their commissions to zero.
Instead of making money from commissions, the company makes its money through order flow, where it sells information to other companies.
Investors love Robinhood. So far, it has raised more than $2.2 billion at an $11 billion valuation. Some of the notable investors are Aaron Levie, Index Ventures, and Thrive Capital. It also has more than 10 million monthly active users.
Robinhood has not said when it expects to go public, but analysts believe it will do so in due time. Once it does, some of the benefits of investing in it will be its rising market share among the youth and the potential for its yet-to-be-launched cash management service.
Final thoughts
Investing in technology companies has proven to be a winner for patient investors. For example, in recent years, companies like Shopify, Square, and PayPal have become some of the biggest firms in the world. This is because their share prices have grown by more than 100% within a few years. Therefore, following some of these companies when they make an IPO will help you to realize significant growth in the future.
