Emily MartinezThe U.S. initial public offering (IPO) market is a tale of revival and resilience in 2023. As per data from Ernst & Young, the first half of this year witnessed 63 new IPOs, raising a total of $10.1 billion in IPO proceeds. This marks a noteworthy increase from the 51 IPOs recorded during the same period in 2022. However, it pales in comparison to the IPO frenzy of 2021, which saw a whopping 416 companies raise $155.8 billion on U.S. exchanges.
Despite the uptick, lingering questions remain about the IPO market’s stability. The potential for an economic downturn or a significant labor market setback could further challenge the IPO arena. Moreover, data shows that only 53% of U.S. companies that went public in 2023 through July 31 are trading above their issue-day prices, indicating a rocky path for new entrants.
Nonetheless, optimism persists. Market sentiment has improved, follow-on activity is on the rise, and signs of inflation receding and equities rebounding suggest brighter days ahead. In this landscape, companies contemplating IPOs would be wise to prepare for future opportunities.
As we enter the autumn of 2023, here are seven IPOs to keep an eye on:
1. Arm Ltd. (Pending Ticker: ARM) – Estimated Valuation: $52 billion
- British chip designer Arm is set to make its debut on the Nasdaq Global Select Market. Arm’s technology is integral to global smartphones, including Apple’s iPhones, and it aims for a September 14th trading date.
2. Instacart (CART) – Valuation: $12 billion
- After years of speculation, Instacart officially declared its intention to go public in September 2023. The San Francisco-based company’s app connects freelance shoppers with grocery delivery requests and reported sales of $1.5 billion in H1 2023.
3. Chime Financial Inc. – Estimated Valuation: $25 billion
- Chime, an online bank targeting young adults, delayed its IPO plans in the past but could debut this year as fintech stocks rebound.
4. Stripe Inc. – Estimated Valuation: $50 billion
- Stripe, a prominent online payment processing firm, is expected to make an IPO decision in 2023. It previously raised $6.5 billion in private funding.
5. Reddit Inc. – Valuation: $5.5 billion (As of May 31, 2023)
- With an estimated 56 million daily users, Reddit has navigated its IPO plans cautiously, facing internal challenges with unpaid moderators and reshaping its operations.
6. Kenvue Inc. (KVUE)
- Kenvue, the consumer health company behind brands like Band-Aid and Listerine, is trading slightly above its IPO price. Its strong balance sheet and high-profile products bode well for its future.
7. Nextracker Inc. (NXT)
- Nextracker, which specializes in solar power technology, has thrived following the extension of solar tax credits. Its recent sales growth and solid financial performance have boosted investor confidence.
While the IPO market in 2023 showcases promise, it remains essential for companies to remain vigilant, prepared, and strategically poised for when the IPO sector regains its momentum, just as it did from 2017 to 2021.
Michelle Thompson
