Written by James Royal – 4 min read – Edited By Brian Beers
The year 2022 could have a number of hot IPOs hit the market, including names that consumers should quickly recognize, such as Reddit, Discord and Chime, as well as some others they might not know yet. While this year has started off rough for the stock market – and may show more turbulence as the Fed seems inclined to raise interest rates – companies are still expected to take advantage of the broadly favorable climate to go public.
Here are seven hot names that may conduct their IPO in 2022.
List of hot upcoming IPOs to watch
Last year was a record-breaking year for IPOs, as more than 1,000 companies hit the market, according to Barron’s. Collectively these companies raised more than $315 billion in funding. That was double the number of IPOs in 2020 (457), raising a total $168.7 billion, says Barron’s.
What will the 2022 IPO market hold for investors? Some well-loved consumer names are already planning to debut this year. But the big question for investors is whether a volatile market will slow the pace of IPOs, which are traditionally sensitive to the market’s volatility. With the Fed planning to raise rates this year, the stock market has been selling off in anticipation.
In fact, January 2022 was one of the worst opening months ever for stocks. The Nasdaq Composite Index fell about 9 percent to start the year. The Standard & Poor’s 500 Index saw a 5.3 percent decline, its worst month since March 2020, when the emerging COVID pandemic threw the markets for a loop.
With the significant downturn at the end of last year and into 2022, many recent IPOs have seen their stock prices slashed. That may leave many companies rethinking their IPO plans or at least holding off until the market looks stronger for new issues. But some of the most anticipated IPOs may expect robust demand anyway, and many are expecting valuations in the tens of billions.
1. Mobileye
Is it an initial public offering if the company has already been public? Technically yes. That’s the situation with Mobileye, the purveyor of advanced driver assistance systems, which went public in 2014 before being scooped up by Intel in 2017. Now Intel is looking to take the asset public again in mid-2022 to capitalize on Mobileye’s fast growth – revenue rose 62 percent in the first nine months of 2021 – with an IPO. Automotive systems and electric vehicles have been hot properties in the IPO market, and Mobileye is reportedly targeting a $50 billion valuation.
2. VinFast
VinFast is an electric vehicle manufacturer out of Vietnam, and it’s looking to capitalize on the ridiculously strong investor appetite for companies such as Tesla and Rivian. VinFast expects to start delivering SUVs to the U.S., Canada and Europe by the end of the year. It’s also planning to open a factory in the U.S. by the end of 2024, according to Bloomberg. The company is looking for a valuation that’s big enough to drive an electric vehicle through – $25 billion to $60 billion.
3. Reddit
Reddit is the so-called “front page of the Internet,” and it operates one of the most popular sites for engaging in discussions with others who share their hobbies and interests. Reddit blasted into popular consciousness in 2021, as it was the epicenter of stock traders who propelled GameStop stock into the stratosphere. Reddit last raised money at a $10 billion valuation, garnering more than $400 million in funding from Fidelity Investments in August 2021.
4. Instacart
While the global pandemic hit many businesses hard, one company that seemed to thrive during the tough times was Instacart, the app that delivers groceries and other goods to your home. Instead of venturing out, consumers stayed safely at home and ordered their food in. In March 2021, Instacart completed a funding round that valued the company at $39 billion, led by top venture capital firms including Andreesen Horowitz. Instacart has been rumored as an IPO candidate for the last couple years – 2022 could finally be the year it goes public, though.
5. Chime
The fintech space has been hot, hot, hot, and Chime is one of the largest private players here, offering bank-like services via its app. Chimes avoids the fees that are typical of many brick-and-mortar banks – monthly fees, overdraft charges and others. In August, Chime raised new funding at a valuation of $25 billion in a round with noted investors SoftBank, Sequoia Capital Global Equities, Tiger Global and others. Reportedly, the company is seeking between $35 – $45 billion in an IPO.
6. Discord
If you’re into video games, you’ve probably heard of Discord, an app that offers instant messaging, voice and video calls. Basically, what Slack or Microsoft Teams are to the work world, Discord is to the gaming world. Growth has been brisk. Discord’s monthly active users soared from 56 million in 2019 to 140 million by the end of 2020, according to the Wall Street Journal. Microsoft approached the chat app in 2021 about being acquired, for a reported price of at least $10 billion, but no deal materialized. A funding round in September 2021 valued the company at $15 billion.
7. ServiceTitan
Software created around the needs of various business types is a perennially hot asset, and ServiceTitan provides home service providers – think, plumbers, electricians and the like – with a way to manage their businesses. ServiceTitan’s offering covers such processes as payroll, job scheduling, marketing and more. Its last funding round in June 2021 saw the firm valued at $9.5 billion, and it boasts sponsors such as Tiger Global and Sequoia Capital. The company is reportedly trying to reach a valuation as much as twice that most recent valuation.
Bottom line
The number of IPOs tend to soar when the market is hot, and while it is, companies are anxious to tap the available funding and garner an attractive valuation. But even if the market is less robust in 2022 than it was last year, it could still be a solid year for companies to go public. The wild card is the market’s volatility and whether it delays many companies from listing until things settle down.
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Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
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