Despite it all, 2020 has been a record year for the IPO market.
We started off 2020 with high expectations. The list of potential IPOs for 2020 was long and included many trendy startups. Here at Wealth Daily, I tend to write about what we can expect for the year ahead. Near the end of 2019, I wrote about the IPOs that the market was anticipating for 2020. It was set to be a huge year with massive gains, but that momentum quickly dwindled in the first few months of the new year.
As 2020 began, we got news of a highly contagious airborne virus being called “COVID-19.” Anxiety seeped into the U.S. markets as it became clear that people and governments weren’t prepared for a global health pandemic like the one we were about to experience. The virus quickly started to spread all over the world, and containing it became nearly impossible.
As health experts and governments learned about the virus and worked hard to figure out how they might contain it, countries throughout the world, as well as most states in the U.S., adopted some type of “lockdown” or “stay-at-home” orders for their citizens, fearing that surging cases of the virus would overwhelm hospitals. These orders essentially shut down economies. Facing an uncertain future, those IPOs that had been planning to go public put those plans on indefinite hold. There was no way those companies would be able to raise the IPO proceeds they might have in a thriving market.
2020 was shaping up to be the kind of year that most investors had never experienced — and not quite in the way we’d anticipated at its start. IPOs essentially stopped, with only a few companies braving the uncertainty and going public. It wasn’t until early summer that we saw a shift, with more IPOs coming to market. As coronavirus restrictions were lifted, a few companies tested the waters to see how receptive the market would be to IPOs. The momentum those companies created has continued into the final months of the year and led to one of the busiest Decembers the IPO market has seen.
There have been over 200 IPOs — not including IPOs from special purpose acquisition companies (SPACs) — in 2020. More than half of those IPOs are trending upward since making their public debuts. In the last few months, there has been an uptick in IPOs, with 97 in October and 41 in November. These months tend to be slower because of the upcoming holiday season and most companies waiting until the next year to go public. But this year, it doesn’t appear that companies are waiting, and it doesn’t appear that the IPO market is slowing down. So it’s important to take a look at a few companies that could go public in 2021 and potentially continue on the prosperous path laid in 2020.
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Bumble
Bumble is a popular female-focused dating app. It’s starting to catch up in popularity to Tinder, which is one of the many dating apps under Match Group’s (NASDAQ: MTCH) umbrella. The company was founded back in 2014, and it’s unique because it requires women searching for heterosexual matches to make the first move. The company not only offers dating options but also professional and social networking. Bumble also owns other apps, like Badoo, a popular dating service outside the U.S. The company hit 100 million users in mid-2020 and is eyeing a first-quarter 2021 IPO. It’s been reported that Bumble is working with Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) for its public offering and being advised by Morgan Stanley (NYSE: MS). Dating through apps has become the norm in the past decade — a way to lessen the pressure of meeting someone and finding out if you’re compatible with that person. Bumble reported a 26% increase in messages from its app in the early months of the COVID-19 pandemic. As of September of last year, Bumble had 66 million users and was profitable, with a valuation of $6 billion–$8 billion.
Instacart
Instacart is an online grocery delivery company. Little-known before the pandemic, it has since gained popularity and success in 2020. The company offers an online marketplace with delivery and pickup services. Instacart is available in 5,500 cities in North America. Last year, the company was able to expand its efforts to 150 retailers that offer delivery for 8,000 stores and pick-up for 1,500 stores. Instacart started out designed for groceries but expanded with retailers like Sephora, 7-Eleven, and CVS Health. Its valuation rose from $7.9 billion at the beginning of 2020 to more than $17 billion by early October 2020. The company plans to expand from the more than 500 retailers and 40,000 store locations it currently serves. Analysts expect an early-2021 IPO for Instacart. In October 2020, Instacart completed a funding round that raised about $200 million, which put its valuation at $17.7 billion. An IPO from the company could bring that up to $30 billion. There are rumors that Instacart has been talking to Goldman Sachs (NYSE: GS) about underwriting its offering.
Roblox
Roblox is a U.S. gaming platform that has more than 36 million daily active users in its virtual world. In this world, players are able to create their own games and experiences. The company aims to be one of the first to build realistic avatars that would be a part of a “metaverse,” a universe of virtual worlds that are all connected. The company recently acquired Loom.ai to help build its realistic avatars. It was eyeing an IPO at the end of 2020 but has postponed its plans until 2021. Roblox was originally targeting a valuation increase of up to $8 billion. A 2021 IPO could put Roblox in a better position to further increase that valuation. The company has risen in popularity and gained users thanks to the pandemic, so waiting could work in its favor. Roblox wants to iron out a few more details before it goes public, so it can have a successful market debut. We’re expecting an early 2021 IPO from Roblox.
This year was a strong one for the IPO market, even with everything against it. I believe 2021 could be an equally, if not stronger, year.
Until next time, Monica Savaglia Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
