The U.S. stock market had a ball in 2021 with a solid and steady performance for most of the year, despite Covid-19 concerns.
A couple of milestones were achieved by the major stock indices and stock traders luxuriated in the rally. The S&P 500 jumped not only close to 30% but also notched its third best annual performance in the 21 century.
The year also marked a rebound for the U.S. IPO market, which was buoyed by improving consumer sentiment and economic fundamentals.
Successful initial public offerings poured in primarily from the technology sector, with Coinbase (NASDAQ: COIN), Roblox (NASDAQ: RBLX), and Rivian (NASDAQ: RIVN) among the major companies that went public in 2021.
According to data compiled by Renaissance Capital, 397 IPOs were priced last year, marking an eye-popping 80% increase from 2020.
Total proceeds raised in the last year surged 82.1% from 2020 to $142.4 billion.
However, considering the S&P 500’s remarkable gains, the IPO market performance was not as robust as expected, mainly due to investor worries about frothy valuations and expectations of higher interest rates.
Nonetheless, the outlook appears bright for 2022 amid expectations of an improved economic environment.
While the year has got off to a tough start for stocks and may force more turbulence as Federal Reserve policymakers appear inclined to hike interest rates, analysts still expect companies to capitalize on the broadly favorable environment to hit the public markets.
Moreover, overseas companies love to list their stocks in the U.S. stock markets and this trend is likely to continue this year.
Additionally, the IPO market is likely to experience an increase in “unicorns,” or companies whose valuation is more than $1 billion.
With that in mind, here is a list of the top five most anticipated IPOs of 2022.
Reddit Inc
Reddit, the social media site that fueled a meme stock trading frenzy last year, has already filed for an IPO, making it the single most awaited surefire offering of 2022.
The company submitted confidential IPO paperwork to the U.S. Securities and Exchange Commission (SEC) in December 2021. However, it did not indicate the number of shares it intends to offer and the price range.
According to a report from Reuters, Reddit could seek a valuation of over $15 billion when it floats its shares. The 16-year-old company has raised over $1 billion in private capital from investors including Sequoia Capital, Fidelity Management, Andreessen Horowitz, and Advance Publications.
Reddit was valued at $10 billion after completing a private funding round in August. Based in San Francisco, Reddit was founded by Steve Huffman and Alexis Ohanian.
The platform allows users to trade photos, videos, stories, and comments using topic-based message boards. It boasts more than 100,000 active communities that are visited by more than 52 million people daily.
Reddit is now seeking to move deeper into video and audio, which command premium ad rates. In the second quarter of fiscal 2021, the company generated its first $100 million advertising revenue, nearly triple what it posted a year earlier. However, the company isn’t yet profitable.
Early last year, Reddit made headlines after its WallStreetBets forum, laid the foundation of a massive surge in the so-called meme stocks like GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC).
It is still too early to tell whether the Reddit IPO will be a good one. But given the company’s current valuation numbers and revenue, it is likely to have a fairly lofty valuation than its peers.
Mobileye N.V.
Intel (NASDAQ: INTC)’s autonomous driving unit Mobileye is also set to go public mid this year via an IPO of new issued stock.
Founded in 1992 by Amnon Shashua and Ziv Aviram, Mobileye first made its public debut in 2014 but was later acquired by Intel for $15.3 billion in 2017.
Mobileye manufactures chip-based camera systems, which are used to power semi-automated driving features and that technology is expected to play a major role in the autonomous vehicles of the future.
After the IPO, Intel will retain a majority stake in Mobileye and both companies will continue to co-develop solutions for the automotive industry. Mobileye’s executive team, which is led by Shashua, will also stay on board.
Spinning off Mobileye via an IPO simplifies the story for both Intel and Mobileye.
Intel will own a huge chunk of Mobileye while the latter will be a high-growth autonomous vehicle technology company with great potential. As per Reuters, the deal could value Mobileye as high as $50 billion – about a quarter of Intel’s current market value.
Intel also hopes that its own stock will start to reflect the value of its stake in Mobileye once shares of the Israel-based company begin to trade.
Mobileye has consistently grown at a faster rate than Intel and it serves a still-nascent sector. According to Intel’s projections, the automotive silicon market will hit $115 billion by 2030.
The auto industry is quickly shifting to autonomous cars and electric vehicles, a move that has created a demand for electronics. The software chips Mobileye makes work with sensors to hand more driving functions to vehicles, with the end goal of replacing human drivers.
Mobileye shipped 100 million EyeQ system-on-chips in 2021 and won more than 30 contracts with automakers globally.
Arm Holdings
Now that what might have been the biggest acquisition in the chip industry is officially dead, British chip designer Arm is now preparing to go public this year.
Arm, one of the major players in the industry, was set to be acquired by Nvidia in a deal worth $40 billion.
Under the terms of the deal announced in September 2020, Nvidia would have paid Arm parent company SoftBank $12.5 billion in Nvidia stock and $12 billion in cash, with an additional $5 billion placed under an earn-out clause.
However, the deal faced stiff resistance from regulators in the U.S., UK, EU, and China, ultimately forcing Nvidia and SoftBank to call it off.
Had it gone through, it would have given Nvidia control of Arm’s chip designs, which power almost all smartphones and tablets in the world.
SoftBank now sees an Arm IPO as the best way forward. The Japan-based conglomerate said after the deal collapsed that it will seek an offering in the fiscal year starting April 1.
Arm has appointed Reene Haas as its new CEO, replacing Simon Segars, who stepped down after three decades with the company.
Haas believes Arm has a bright future even without Nvidia’s reach and resources. He also stated that the company intends to go public in almost the same “classic” version of the company that existed before it was acquired by SoftBank.
Arm first made its public debut in 1998 and remained publicly held until SoftBank acquired it in 2016.
While reports say some British politicians have said they would like to see Arm listed in the UK, SoftBank may decide to float the company in New York instead.
VinFast
VinFast, a fast-growing EV automotive startup based in Vietnam, is reportedly considering a U.S. initial public offering in the second half of this year.
According to Reuters, VinFast parent Vingroup JSC is working with investment banks to prepare for an offering that would make the EV maker one of the first Vietnamese firms to list on a U.S. stock exchange.
The news publication, citing people familiar with the matter, claims that VinFast is likely to raise as much as $3 billion from the offering.
In November, Vice Chairwoman Le Thi Thuy told Bloomberg News that the company expects to be valued at between $25 billion to $60 billion after the IPO.
In a separate interview, Thuy said the company is also holding talks with potential investors to raise billions of dollars in equity and debt to fund its EV expansion plans in America.
However, Thuy said VinFast hasn’t decided if it will pursue a listing via traditional IPO or through a merger with a blank-check company.
The company unveiled two electric SUVs, VF e35 and VF e36, at the Los Angeles Auto Show in November. It will start U.S. accepting preorders for the two models in spring this year and expects to start delivering the vehicles in the fourth quarter.
Chime Financial Inc.
Chime is a financial technology company that offers lower cost, higher-yielding saving accounts, and an easy-to-use mobile app. The San Francisco-based company is reportedly prepping for an IPO this year.
Founded in 2013 by Ryan King and Chris Britt, Chime operates a fully mobile platform that provides many of the services offered by traditional banks without the need for physical locations or branches.
Reuters says that Chime has tapped Goldman Sachs to help it prepare for the offering, which could value the fintech company at up to $40 billion.
Chime has taken advantage of the continued growth in digital banking during the Covid-19 pandemic, adding more users.
The company has raised $2.3 billion from venture capitalists and is currently valued at $25 billion. The valuation makes Chime one of the most valuable private fintech companies in America. In its most recent funding round in August, Chime raised $750 million.
Notable investors in the company include Dragoneer Investment Group, General Atlantic, Access Technology Ventures, and Northwestern Mutual Future Ventures.
Until it makes its Wall Street debut, Chime is a private company – and so are its finances. In September 2020, Britt told CNBC that the company will be ready for an IPO within the next 12 months. Therefore, we can expect an announcement for the IPO at any moment since that timeframe has lapsed.
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