2020 was a blast for companies going public through IPOs. There were 480 IPOs in 2020 — a new all-time record and 106% increase from the 233 IPOs in 2019. Though special purpose acquisition companies (SPACs) stole some of the limelight from the IPO pipeline, some of the biggest IPOs of the years have already doubled or tripled from listing. Companies like Lemonade, Snowflake, Airbnb, Palantir and Doordash have already killed the benchmark. The IPO Renaissance ETF ($IPO), which tracks companies up to two years after they IPO, doubled last year. In the same period, the S&P 500 traded up only 16%.
2021 is building on the foundations of last year’s standout IPO pipeline and is shaping up to be superior in every single way. A handful of companies are looking to capture investor interest and make huge runs in the first quarter of 2021. So, Bullish is highlighting a handful of IPOs we have our eyes on:
ROBLOX has scaled into a universe of original gaming content with over 35 million daily active users. Over half of all U.S. kids and teens under the age of 16 play the sandbox building game. The company might be on pace to make more money than Fortnite, a video game you probably know about if you’ve ever talked to anyone under the age of 13.
ROBLOX will forgo the traditional IPO process by doing a direct listing thanks to recent fundraising valuing the company at nearly $30 billion. A direct listing skips the process of raising money by issuing more shares. This means the company’s private investors are poised to be the biggest winners. The company’s listing will bring one of the world’s biggest gaming companies onto markets.
Millions of investors, empowered by the $1,200 stimulus check and stay-at-home orders, began trading stocks for the first time in 2020. The retail investor boom fueled a rush in the fintech space. The biggest benefactor was Robinhood, a new-age brokerage which brought commission-free trading into the mainstream.
Now, Robinhood is looking to capitalize on the rush of investor interest with an IPO of their own. The company makes money off of every equity and option trade made. The platform now boasts over 13 million users, meaning there’s a lot of trades being made. Robinhood makes money by fulfilling order flow for customers, which helped them make over $180.2 million in 2020 second-quarter earnings.
All brokerages generate revenue from creating order flow. However, companies generate more revenue from options orders than equity orders. Robinhood net $0.58 for every option order placed in the second quarter 2020. They only net $0.0017 for every share purchased.
The newfound demand from retail investors likely makes Robinhood one of the biggest recent fintech IPOs. The company was valued at nearly $12 billion at the end of its last fundraise. There’s even rumors circulating that the company will sell shares to their clients in advance of their listing.
It turns out retail investors weren’t just interested in stocks last year. They were also attracted to cryptocurrency, which made a meteoric run in the last quarter of 2020. U.S.-based crypto exchange Coinbase was one of the few companies positioned to saddle the renewed interest in crypto. Now, they’re looking to go public.
Coinbase generates almost all of their revenue from fees on trades of cryptocurrencies like Bitcoin, Ethereum and Ripple. The company has a retail platform for individual traders, pro platform for pro traders and custody and staking service for institutions and high net worth individuals. They also invest in cryptocurrency projects through their Coinbase Ventures branch, which has dumped millions of dollars into cryptocurrency and decentralized finance (defi) products.
Coinbase’s $8 billion valuation will make it one of the biggest stocks on markets catering to the cryptocurrency and defi crowd. As a result, it’s poised to become a proxy on public markets for demand in the crypto space.
Whenever you check out online from a company like Target, Amazon or Shopify, somebody has to process the payment. Payment processing has become a huge business. While companies like Square ($SQ) capitalize on physical payment processing, Stripe is the giant capitalizing on your online payments. Stripe might be the most influential tech company you’ve never heard of.
At a private valuation of $35 billion, Stripe is already set up to be 2021’s biggest IPO. The company hasn’t announced its plan to go public yet, but the company already raised another round at a $70 billion valuation. That means Stripe could end up being one of the biggest IPOs of all time. That amount of money might seem unfathomable. But with over 1 million retailers using the Stripe platform, $70 billion might not be as much as we think.
During the pandemic, dating and networking apps saw an uptake in users. Match Group ($MTCH), which counts Tinder, Hinge and 20 other dating sites and apps among its ranks, rose over 81% in 2020. Bumble, a sort of ideological competitor to Tinder, now wants to get in on all the interest in the dating scene.
Bumble gained traction as a dating app where women make the first move. The company has grown to a valuation over $3 billion since it was founded in 2014. The company has since added a networking and friend-finding component alongside the core Bumble Date experience. In 2019, the app clocked north of 100 million users and over $240 million in revenue.
The bulk of that revenue came from Boost, a premium subscription allowing users to unlock all the people who swiped on them at once. They also have Spotlight, a premium “power up” allowing users to boost their profile in a certain geography. Their revenue is also accounted for in advertising and partnerships, which is not publicly available.
Assuming online dating and dating apps continue to be big contributors to the dating economy, Bumble might find a stock where people literally bet on love.
Honorable Mentions: Affirm and Instacart
Our shortlist also deserves some honorable mentions. The first being Affirm, a company providing installment plan options at checkout for consumer products. Affirm IPOed Jan. 13 this year to great fanfare with investors. It doubled in its market debut, and there’s probably more opportunity for growth where that came from. Our second honorable mention is Instacart, an online grocery delivery company. Instacart saw strong demand early in the COVID-19 pandemic. However, a lot of that interest has waned, according to data from Google Trends. We’re not sure if Instacart will be a boom or bust, but we’re excited to see its come-to-market moment later this year.
Thanks for peeping our shortlist of exciting IPOs to watch in the first quarter of 2021. We’re really interested in knowing what IPOs you’re excited about, so shoot us a tweet or slide into our DMs on Instagram. Keep an eye out for our list of the top up-and-coming SPACs brewing.