The initial public offering (IPO) market overcame a lightning-quick bear market in 2020 to bounce back to levels not seen since the dot-com boom. But there’s still a laundry list of upcoming IPOs for 2020, and especially 2021, as a host of companies plan on tapping Wall Street for much-needed capital.
Some of the year’s highlights? Business-to-business database operator ZoomInfo (ZI) helped open the floodgates in June with its $8.2 billion IPO. Game engine developer Unity (U) went public in September at a $13.7 billion valuation. Cloud infrastructure firm Snowflake (SNOW) hit the markets around the same time, marking the largest-ever software IPO at a valuation of $33.2 billion – an offering that got the attention of Warren Buffett.
You can thank a rapid snap-back rally and rock-bottom interest rates for rejuvenating Wall Street’s wheeling and dealing. But there are other factors at play:
- The mega-trend of digital transformation continues to thrust more companies into the public markets. Many companies realize that to remain competitive, they must adopt modern technology such as cloud computing, analytics an artificial intelligence – and that means a vibrant technology-sector IPO market in 2020 and 2021.
- Also, venture capital markets have been flush with cash for the past decade. They have spent that cash by investing in thousands of startups, which has allowed them to quickly scale. The next logical step: The IPO, which provides still more capital … and gives founders, employees and VCs a way to cash in.
- Thanks to pushes from the likes of online brokerage Robinhood, trading stocks has become free (or much cheaper) for most investors. That has helped spur larger numbers of young investors looking for high-growth opportunities, like IPO stocks.
In light of this, it seems like a good bet that the momentum will continue for initial public offerings.
Here, we look at some of the most anticipated upcoming IPOs for 2021, as well as the rest of 2020. Right now, that list includes potential blockbuster offerings such as the Nextdoor, Instacart and Airbnb IPOs.
Data is as of Nov. 2. Where possible, we have provided reported expectations for timelines and/or valuations.
Roblox
- Expected timeline: November 2020
- Estimated IPO valuation: $8 billion
The history of online gaming IPOs has not been a good one. Just look at the awful performances of companies including FarmVille creator Zynga (ZNGA) and King Digital Entertainment, creator of the Candy Crush franchise.
But Roblox is a bit different – it’s an online game platform and game creation system – and thinks it can buck this trend. It primarily focuses on kids, for one. And it has built a platform that makes it easier for anyone to develop a game, which has reduced the risk of relying on just a few titles for success.
Roblox currently boasts more than 150 million monthly active users (MAUs), and as of earlier this year, its users spent more than 1.5 billion collective hours per month playing games. Revenues are forecast to hit $250 million this year, up from $110 million in 2019.
Few details are available for a Roblox IPO, as the company made a confidential filing with the SEC. But it could be among the last companies going public in 2020, with an offering coming as soon as November. Expectations are for an $8 billion valuation – double what Roblox was worth in a February Series G funding round.
Affirm
- Expected IPO timeline: November 2020
- Estimated IPO valuation: N/A*
Max Levchin has already transformed the financial services industry when he helped co-found the company that eventually turned into PayPal (PYPL) back in the 1990s. But he made another attempt at disrupting the space in 2013 – this time taking on the traditional credit card industry – when he founded Affirm.
Levchin’s goal was to create an offering that’s highly transparent and has no late fees or penalties. The Affirm card also was built to allow customers to develop their own payment schedules as well as split payments.
The company has attracted more than 5.6 million users, and its merchant base includes the likes of Walmart (WMT), Wayfair (W) and even ascendant Peloton Interactive (PTON).
Affirm has raised $800 million to date, including a 2019 round of funding that saw top-tier VCs and celebrities (such as Ashton Kutcher) alike generate $300 million.
The company filed confidentially with the SEC in October, so few details are available as of this writing. However, an Affirm IPO is expected to happen sometime in November.
* No reliable valuation estimate available at this time.
Airbnb
- Expected IPO timeline: December 2020
- Estimated IPO valuation: $30 billion-plus
Airbnb is one of the few remaining upcoming IPOs of 2020, and it’s likely to be one of the largest. The offering is expected to go live in December, and the home-renting firm is expecting to fetch a valuation of more than $30 billion.
That’s a sharp turnaround from earlier in the year, when the prospects for an Airbnb IPO had all but died. COVID-19 hit the business hard, and Airbnb had to lay off employees and raise $1 billion to shore up its finances.
But since then, Airbnb has staged a remarkable comeback. Part of that is because the company swiftly enacted policies to bolster safety for its customers. There also has been a surge in interest for local vacation stays, and Airbnb capitalized by changing its algorithms to optimize for this. Also, some people view Airbnb rentals as safer (from a COVID perspective) than staying in a hotel with dozens or hundreds of other guests.
By July, Airbnb site activity returned to pre-pandemic levels.
That’s not to say an Airbnb IPO is without risks. After all, it appears the U.S. is enduring a “second wave” of COVID-19, which could mean a tough winter season for travel.
But management’s willingness and ability to make changes is a good sign that the company will find ways to deal with challenges. A strong brand and dominant leadership position also could make Airbnb one of the best IPOs of this year or next.
“When it comes to supply in the accommodation business or for that matter marketplaces that list accommodations, Airbnb’s business model has proven to be vastly superior to incumbent hotel chains,” says Julian Svirsky, CEO of real estate blockchain platform Atlant and home rentals platform Karta. “To put things in perspective, they have over 1.6x more listings than Marriott, Hilton, Intercontinental, Wyndham and Hyatt combined, having been in the business substantially less.”
Bumble
- Expected IPO timeline: Early 2021
- Estimated IPO valuation: $6 billion to $8 billion
Bumble is a unique social networking app that effectively offers three experiences. There’s Bumble Date – a Tinder-esque dating app, but one in which women are solely responsible for making the first move in starting any connections. But there’s also “BFF mode,” which allows people to search for friends. And there’s also Bumble Bizz – a networking system similar to Microsoft’s (MSFT) LinkedIn.
“The biggest reason Bumble is so popular is the comfortable and casual user experience it offers, especially to women,” says Eric Carrell, a DevOps engineer at API platform provider RapidAPI. “They feel safer using an app that lets them make the first move without making information public to everyone on the platform.”
Bumble has reached more than 100 million users in 2020, and it monetizes those users via advertising, as well as a premium subscription option.
It’s no wonder that Bumble has become a major competitor to Tinder. CEO and founder Whitney Wolfe started the firm in 2014 after her stint at the hugely popular dating app, which she also co-founded but left and later sued for sexual harassment and discrimination.
Russian billionaire Andrey Andreev (who already owned his own dating app, Badoo) initially reached out to Wolfe asking her to create a dating app, and he provided $10 million in funding for her to do so. Five years later, in 2019, Blackstone Group (BX) spent $3 billion for a majority stake in Bumble, with Wolfe staying on as CEO. It was an unusual move for the private equity giant, which has mostly invested in traditional companies … but perhaps Blackstone realizes it needs to become more active in the digital world.
Just be careful: The dating app space is challenging, with heavy churn and intense competition.
“The biggest risk is of course competition namely Tinder,” says David Drea, a financial advisor with Morgan Stanley Wealth Management. “Tinder is the biggest rival and has a stronger household name. However, I can see these two being the one-two punch of the online dating world. Other smaller apps just can’t compete with both of their models.”
The timeline for an IPO appears to be early 2021, according to a Bloomberg report. The estimated $6 billion to $8 billion valuation would make it one of the hottest upcoming IPOs for 2021.
AppLovin
- Expected IPO timeline: Early 2021
- Estimated IPO valuation: N/A
AppLovin is a rarity among upcoming IPOs. That’s not because it’s in some bizarre business or has a surreal founder story.
No, AppLovin stands out because it’s actually profitable, and has been since its 2012 founding.
In 2019, for instance, just roughly a quarter of companies that executed IPOs turned a profit. In 2018, that number was closer to 20%. But despite AppLovin’s ability to generate actual earnings, the company still has raised substantial amounts of capital. For instance, in 2018, KKR & Co. (KKR) announced a $400 million investment at a valuation of $2 billion.
AppLovin has built an extensive platform to help game developers build, manage and monetize their apps. The company also has created its own gaming studio, called Lion Studios.
“The company has three core products that try to solve the common issues that game developers are facing: discovery of the game, monetization and proper analytics,” says Ben Feferman, CEO of Amuka Esports. “While there are many competitors who are monetizing mobile apps, I like that they focus solely on gaming.”
The company currently enjoys 750 million daily active users (DAUs) and reaches more than 2 billion devices every month. Growth prospects are promising, too. Consulting firm Altman Vilandrie & Company forecasts that spending on game development solutions will expand from $12 billion in 2019 to $16 billion by 2025. The success of the Unity IPO in September 2020, as well as the success of video game stocks across the board, also portends good things for an AppLovin IPO, which is expected sometime in 2021.
“AppLovin is a really interesting play because you get exposure to the hyper-growth mobile gaming industry but without the traditional risk factors that game developers have – that is, the changing consumer behaviors,” Feferman says.
Instacart
- Expected IPO timeline: First half of 2021
- Estimated IPO valuation: N/A
In 2010, Instacart founder Apoorva Mehta left his post as the Fulfillment Optimization SDE at Amazon.com (AMZN) to move to San Francisco and start his own venture. And he ran into a lot of speed bumps, trying out 20 different products to no avail.
But he finally hit upon something with promise: an on-demand network for delivering groceries and other products. At the heart was an app that connected contractors – who did the shopping – with customers.
The pandemic turned 2020 into a game-changer for Instacart. The emergence of COVID-19 has spurred millions of people to adopt app-based delivery services.
Instacart has built a sophisticated logistics system, which involves agreements with more than 400 retailers spanning over 30,000 stores. That network translates into a reach of about 80% of U.S. households and 70% in Canada.
Instacart has still been busy raising funds, including a $200 million round from Valiant Peregrine Fund and D1 Capital Partners, following a $225 million raise in June led by DST Global and General Catalyst, with D1 participating. But Financial Times reported in early October that the company was consulting with banks ahead of a potential IPO, expected sometime in the first half of 2021.
That latest round values the company at $17.7 billion. So while there’s no hard estimate on an IPO valuation, the Instacart IPO should be one of the largest of 2021.
ThoughtSpot
- Expected IPO timeline: Fall 2021
- Estimated IPO valuation: N/A
ThoughtSpot founder Ajeet Singh has actually helped build two billion-dollar companies.
Singh co-founded cloud infrastructure and services firm Nutanix (NTNX), a roughly $5 billion firm, in 2009. He believed that cloud computing would be a mega-trend and that businesses would have a need for highly scaled infrastructure software (and he was right). Nutanix eventually went public in September 2016.
But Singh wasn’t around for that. He left in 2012 to target another huge technology trend: analytics and AI. So Singh would found ThoughtSpot, whose platform allowed organizations to integrate myriad sources of data and to set up sophisticated dashboards.
Co-founder Amit Prakash has an extensive background in the analytics space, including time as a leader on the engineering team for Google’s AdSense business. Before that, he served as a founding engineer for Microsoft Bing, where he helped to develop the page rank algorithms.
The analytics market has seen plenty of dealmaking over the past couple of years. The highlights include Salesforce.com’s (CRM) whopping $15.7 billion buyout of Tableau in summer 2019, and Alphabet’s (GOOGL) $2.6 billion acquisition of Looker around the same time frame.
While there are no firm estimates on a possible IPO valuation of ThoughtSpot, its last round of funding was a Series E in August 2019 in which it raised $248 million at a valuation of nearly $2 billion.
Expected timing for an IPO is fall 2021.
Petco
- Expected IPO timeline: 2021
- Estimated IPO valuation: $6 billion
Pet retailer Petco likely won’t have the same buzz as many of the tech-facing offerings of the next year or so. But it still is one of the upcoming IPOs that investors should keep their eyes on, simply given its strong brand and extensive footprint of more than 1,500 locations.
If nothing else, it should be a smooth process. Petco is plenty familiar with going public, as it has done so three times since its founding: in 1994, again in 2000 and yet again in 2002. IPO No. 4 is expected in 2021.
Petco does have some nagging issues, such as general pressure on the brick-and-mortar industry from Amazon.com, but also specific pressures from online pet-goods retailer Chewy (CHWY).
However, Petco is trying to bolster its image, rebranding itself as “Petco, The Health + Wellness Co.” This rebrand has included stocking more healthy items on shelves and creating in-store veterinary clinics, which includes the option of signing up for an annual “Petco Core Care” membership plan. It’s a smart strategy considering pet owners are willing to spend large amounts on medications and treatments.
Analysts estimate that the Petco IPO would reach a valuation of about $6 billion. For comparison, Petco went private in 2015 in a $4.6 billion transaction.
UIPath
- Expected IPO timeline: 2021
- Estimated IPO valuation: $15 billion-plus
Daniel Dines grew up in Romania and eventually became a superstar coder at Microsoft from 2001 to 2005. But what he really wanted to do was build his own company – and he did, one focused on building technology to help with integration and outsourcing.
Things didn’t go so well … for years, in fact. Competition was thick. Margins were slim.
But in 2015, he changed his company’s name to UiPath alongside a strategy pivot. Dines went all-in on developing a platform for robotic process automation (RPA), which helps to automate tedious business tasks and processes. This game-changing move sparked a growth acceleration.
Fast-forward to today, and UiPath is a $10.2 billion company, based on a $255 million round of fundraising from top-tier investors including Accel, Coatue Management, Dragoneer Investment Group, Sequoia Capital and Tiger Global. Revenues are on track to exceed $400 million in 2020.
RPA has turned out to be essential for many large corporations. The technology has a quick return on investment (ROI) and can be key for a firm’s digital transformation. RPA also has played a significant role in helping companies deal with dislocations from the COVID-19 pandemic, such as by making it easier to set up remote-work systems.
According to Reuters, UiPath is evaluating Wall Street banks for an initial public offering, with an estimated valuation of more than $15 billion. Based on its strong growth metrics and its large market opportunity, this could be one of the most anticipated upcoming IPOs for 2021.
Oscar Health
- Expected IPO timeline: 2021
- Estimated IPO valuation: N/A
Oscar Health’s origins go back to 2012, when Harvard Business Classmates Mario Schlosser, Kevin Nazemi and Josh Kushner (the brother of Jared Kushner) had an idea to create a new kind of health insurance company based on cutting-edge digital technologies. The timing was spot-on, too, as Oscar Health would benefit from the rollout of the Affordable Care Act (ACA).
Schlosser and Kusnher had personal reasons for starting the company. Schlosser, had a bad experience with dealing with the hospital billing when his wife was pregnant. Kushner had a similar experience when he injured his ankle.
Oscar Health has raised more than $1.5 billion since its founding. This capital was used to launch insurance products for families, small businesses and those with Medicare Advantage plans. The company also has had success with its telemedicine platform.
Overall, Oscar Health boasts roughly 420,000 members, who collectively have been positive about the service – no easy feat in this space. The company’s Net Promoter Score is 36, which compares extremely favorably compared to the industry average of -12 across the ACA.
Another potential driver for growth was a strategic partnership with Cigna (CI) to provide insurance to small businesses, announced in early October.
Axios reported in September that the firm has hired investment underwriting banks to help it prepare for a 2021 offering.
Nextdoor
- Expected IPO timeline: 2021
- Estimated IPO valuation: $4 billion to $5 billion
Nextdoor, founded in 2008, is a social network for your neighborhood. While the site allows you to make connections, it’s also useful in sending out or receiving recommendations and referrals, organizing events and posting alerts. You can even sell items on the platform.
Nextdoor, which is available in 11 countries across 268,000 neighborhoods, including roughly a quarter of U.S. households, was founded by several Silicon Valley entrepreneurs who were able to quickly get venture backing from the likes of Shasta Ventures and Benchmark.
Sarah Friar, previously CFO of Square (SQ) when that company came public, became CEO of Nextdoor in late 2018. She also was an executive at Salesforce.com and a top software analyst at Goldman Sachs (GS).
Nextdoor, which has raised $470 million since its founding, is expected to hit the markets in 2021 at a valuation of between $4 billion and $5 billion.
Ascensus
- Expected IPO timeline: 2021
- Estimated IPO valuation: $3 billion
Ascensus is one of the oldest companies in this list of upcoming IPOs for 2020 and 2021, launching in 1980 as The Barclay Group (not to be confused with Barclays) to provide services for the 401(k) market. This came just as the U.S. was about to make a massive transition in retirement planning, shifting from pensions to self-directed options.
Ascensus has since diversified its business, primarily via an aggressive M&A strategy. Besides a thriving 401(k) business, Ascensus also provides services for 529 college funds and Health Savings Accounts (HSAs). The company says it has more than $327 billion in assets under administration, with more than 3,700 employees, and it has extensive distribution through a large network of financial advisors.
Recently, Ascensus has been investing in improving its technology. One such example was its launch of a personalized sales system for representatives that automates the proposal process.
Ascensus has already hired Wall Street bankers – Barclays and Goldman Sachs – to put together the offering documents. A deal is expected to hit a value of $3 billion and hit the markets sometime in 2021.
