7 upcoming IPOs to watch in 2024
The IPO market finally loosened up in late 2023 after one of the worst periods for debuts in more than a decade. Rapidly rising interest rates – courtesy of an aggressive Federal Reserve fighting inflation – put the market on edge in 2022 and 2023, dampening the risk appetite that’s vital to a strong IPO market. Now with investors anticipating that the Fed is done raising rates and the potential for a so-called “soft landing” for the economy, the IPO market has warmed up.
Some 108 companies conducted their IPO in 2023 and raised $19.4 billion, according to Renaissance Capital. Those figures rose markedly from the 2022 doldrums of 71 IPOs and just $7.7 billion raised. But 2022 was the worst year for IPOs since at least 2010, so last year’s strong rebound performance comes off a much-reduced base, with a large part of the increased volume in the back half of the year, as the Fed took its foot off the brake of higher interest rates.
Many market watchers foresee a climate that may grow more conducive to increased activity.
“Looking forward, the consensus within financial circles suggests a shift towards more stable market conditions reminiscent of the comparatively tranquil years of 2018 and 2019,” says Akshata Bailkeri, head of research at EquityZen, a secondary equity marketplace. “A more stable market could provide a supportive environment for companies aiming to go public.”
Renaissance anticipates “continued pickup” in IPOs in 2024, though acknowledges that “the IPO market’s recovery is still somewhat tenuous.” The always-sensitive market could close the funding window if conditions deteriorate, such as if the economy clearly slides into a recession.
Here are some of the most anticipated IPOs for 2024.
7 hot IPOs to watch for
1. Stripe
Stripe’s payments processing business for e-commerce has been riding the wave of online shopping, which moves higher during the pandemic. The company has major supporters in the form of venture capital firms Andreesen Horowitz, Kleiner Perkins and Sequoia Capital, and hit a high valuation of $95 billion in 2021, though a $6.5 billion raise in March 2023 valued the firm at just $50 billion. Stripe has been rumored to be on the IPO train for some time.
2. Databricks
Databricks is a tech unicorn that has the potential to be an IPO valued in the tens of billions, and therefore one of the highest-profile offerings in any year that it goes public. The cloud-based data infrastructure company was valued at $38 billion in 2021, and while that figure was marked down to $31 billion in October 2022, a September 2023 fundraising round boosted the valuation to $43 billion. Rivals include recent IPOs Snowflake and Confluent. Databricks has some 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 those who share similar interests and hobbies. The company filed for an IPO confidentially with the Securities and Exchange Commission in December 2021, but a lack of profitability may have kept the company on the IPO sidelines until now. Issues with labor and concerns over AI using its data may also leave investors waiting and wanting. Reddit’s valuation has been marked down by investors from its $10 billion valuation in August 2021, but the company is reportedly seeking 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 taken private in 2017 by private equity firm JAB Holding. The bakery-restaurant chain has been dropping hints that it’s interested in an offering, in particular as part of a change of CEO in May 2023. JAB already tried to take Panera public via a SPAC in 2022, but the deal was called off. With a solid six years of ownership already under its belt, the holding may be starting to get a bit stale for its private owners. Panera was an investor favorite for many years before its acquisition, and growing restaurant franchises are among the most popular investments on Wall Street, so Panera will likely be a popular name whenever it does emerge.
5. Skims
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, with its latest funding round in July 2023 valuing the company at $4 billion. The company estimated sales growth around 50 percent in 2023, and the heretofore online-only operation is looking to make a splash in physical retail, with flagship stores slated for New York and Los Angeles. With the Kardashian name behind it, Skims stock could take off in an IPO.
6. Shein
Shein is likely to be the biggest IPO in 2024 – even one of the ten largest American IPOs ever – and it’s already made confidential filings with the SEC to conduct an offering. The Chinese fast-fashion firm was valued at $66 billion in 2023, but it’s targeting a valuation as high as $90 billion for the IPO, according to Bloomberg. Hitting the high end of that range would put the company’s debut in the second-highest spot all time. Those valuations may require some sensational operational performance to sustain them, but the firm grew year-over-year sales at more than 40 percent in the first three quarters of 2023, to $24 billion, so it’s a growth monster.
7. Chime Financial
Chime offers a financial app that acts like a bank, offering fee-free accounts for customers. It’s been a hit with consumers, too, and boasts more than 14.5 million active users as of 2022, according to Forbes. Speculation has been rife for years that Chime would be going public, but it’s still private and looking for the right time to debut. Chime’s high valuation was $25 billion in late 2021, and initial reports had an IPO pricing at even a still-higher valuation. However, with the decline in many tech-stock valuations in 2022 and 2023, it’s reasonable for investors to expect a markdown.
Bottom line
After an improving but still lackluster IPO market in 2023, the funding window for newly public companies may improve this year, especially if the overall economy remains mild. But if the economy slows markedly in 2024, it may spell a third straight year of depressed IPO volume.
