With 2023 being somewhat disappointing in terms of initial public offerings, investors are looking ahead to see what’s in store for the IPO market in 2024.
ADVERTISEMENTThis year saw about 968 initial public offerings (IPOs) around the world in the first three quarters of the year. This was a fall of about 8% compared to 2022. However, 2024 offers a glimmer of hope for the IPO market.
This is due to investors anticipating several major central banks, such as the US Federal Reserve and the European Central Bank, to start cutting interest rates.
Several companies which went public this year have had lacklustre beginnings, trading just around or below their offering prices. These include semi-conductor company Arm Holdings, healthcare company Kenvue, footwear manufacturer Birkenstock - and delivery company Instacart, among others.
This was largely due to slowing global economic growth, as well as a range of geopolitical factors such as the ongoing Russia-Ukraine war and the start of the Israel-Hamas conflict. High inflation in several parts of the world have also led to lower consumer spending, undermining the performance of several IPOs.
Which companies are expected to list in 2024?
Looking forward, in 2024, a number of companies have already hinted at upcoming IPOs.
Social discussion platform Reddit is one of the most well-known amongst these, making the company’s IPO potentially long overdue. As such, the company had been planning its public debut for the last few years, but kept postponing it due to market conditions, which spooked several of its investors.
This was especially seen when Fidelity Investments reduced the value of its stake in Reddit by over a third, while also cutting valuations for other technology companies such as Stripe. This cemented the idea that the market was not ready for larger IPOs at the time. Reddit was also reportedly waiting for other big companies such as Shein to go public first, potentially to see how they were received by the market before making its own move.
However, now, the company seems ready to venture forth once more and is said to be in talks with possible investors. With a potential valuation of about $15 billion (€13.7 billion), the company is eyeing the first quarter of next year for its debut.
Fintech company Klarna could also potentially be listed next year, as the company has already taken steps to establish a holding company in the UK. However, spokespeople maintain that there is still a way to go before the company is listed and the establishment of the holding company is simply a precautionary measure. Investors anticipate an IPO early next year, worth about $7 billion.
Payments platform provider Stripe is another IPO to watch in 2024, with the company having announced early in 2023 that it would be going public in the next year or so. Having already hired JPMorgan Chase and Goldman Sachs to advise it on the how and when, Stripe is likely to shun the traditional IPO process and instead go for a direct listing.
The company has already been vocal about its IPO being more so that its shareholders have a way of trading its shares, rather than as a means of raising funds, hence the direct listing. This is largely due to Stripe already being quite established.
Fashion company Shein is likely to list on a US exchange next year, with the company already having filed papers confidentially and looking at a valuation of about $60 billion. However, this could potentially go up to about $90 billion.
The company, like Reddit, has been hesitant to file for an IPO in the last few years, especially following the turmoil other major Chinese companies such as ride-hailing app Didi faced in the US. Shein has also been dealing with legal issues lately. Rival Temu has recently filed a lawsuit accusing the company of using “mafia-style intimidation” against suppliers in China.
Other companies that may list in 2024
Ola Electric is all set to be the first Indian electric vehicle maker to go public, as well as the first auto manufacturer to file for an IPO in India in two decades. The last Indian auto IPO was seen in 2003, when Maruti Udyog went public.
The company is looking to debut by the end of next year, with a valuation of between $7 billion and $8 billion, with Bank of America, Goldman Sachs, Kotak Mahindra Bank and Citibank all working on the IPO. Ola Electric plans to use some of the funds raised through the offering to further its gigafactory in Tamil Nadu by implementing a battery unit and an EV manufacturing unit.
Software company Databricks could also be listing in the first half of 2024, having postponed its potential listing from late 2023. Like other major companies waiting to list, Databricks also seems to be caught up in a waiting game with its peers, unwilling to make the first move, in case of a slump.
The company is also looking to gain new funding for its AI developments, which could slightly delay plans for an IPO even more. However, investors believe that Databricks’ improved artificial intelligence strategy, as well as its recent acquisition of MosaicML could make this the perfect time to go public.
Rubik, maker of the famous Rubik’s Cube, is another IPO player for 2024, as the company started hiring banks to help with the process as early as June 2023. The company was looking at a valuation of about $4 billion a couple of years back, but could potentially go higher by the time it launches.
ADVERTISEMENTCitibank, Barclays and Goldman Sachs have been recruited for the offering, with Rubik reportedly watching the IPO market keenly for welcoming signs, before fixing a date for the next year.
Stablecoin issuer Circle could also be going public next year, a bold move considering the wider crypto market seems to be in a bit of a slump.
However, if Circle succeeds, several other cryptocurrencies could possibly follow suit with their own listings. The company was valued at about $9 billion in February 2022 but its IPO valuation could vary widely, depending on how its stablecoin USDC performs until then.
