2021 saw the economy shoot up in a recovery mode, following the world’s transition into post-Covid normalcy. With the relaxation of pandemic-related restrictions and the mass distribution of effective vaccines, industries saw an epic resurrection, with the financial markets buzzing with activity once again. 2021 also brought with it a staggering amount of IPOs to invest in, with over $300 billion poured into companies initiating a trade. This amount crushed previous records, and thus 2021 had been labeled by many as being the year of the IPO. With 2022 pushing stocks into a bear market and the threats of a looming recession, investors are now more cautious about which IPOs to consider. For all the growth opportunities IPOs offer, a thorough risk assessment is crucial to undertake. Here we present some of the top IPOs of 2022 and 2023 to consider for an investment, in light of wider market concerns.
Discord is a name that most people are familiar with. What had started as a sophisticated and streamlined communication platform for gamers, has taken on some of the most giant tech companies such as Zoom (Nasdaq: ZM), Skype, and even Whatsapp. With its high-quality user interface and low-latency chat features, no chat apps seem to compare with Discord, which has gathered an almost cult-like following.
Many market analysts have been predicting that an IPO for Discord may be imminent, which could rush bulls into action. This comes after reports of the company approaching several investment bankers for a direct listing or IPO to invest in. In the funding round in December 2020, the company’s value was an impressive $7.3 billion. In just 10 months, the company had essentially doubled its valuation and topped $15 billion in 2021. This had just come a few months after turning down a $12 billion acquisition offer by Microsoft (NASDAQ: MSFT). Similar reports emerged of turned-down offers by both Amazon (NASDAQ: AMZN) and Twitter (NYSE: TWTR).
The interest in Discord by some of the largest names in the market comes as no surprise. The company has achieved sky-rocketing growth since its founding in 2015. Its userbase had jumped from 9 million in 2017, to a staggering 150 million at present. Moreover, although Discord does not publicize its financial results, many have approximated its revenue to have soared by almost 200% in 2020. We can, however, tell that the company has been doing extremely well judging by the acquisitions it had undertaken since 2018. These include The Blitz App in 2018, which allows users to earn money by playing online games, as well as emerging augmented reality star, Ubiquity6. The most recent acquisition was Sentropy Technologies, which employs AI tools to identify harmful content such as abuse.
Discord holds all the signs of a company drifting towards an IPO this year or in the next. This is further confirmed by its hiring of its new CFO Tomasz Marcinkowski, who successfully led the Pinterest IPO in 2019. Similarly, the company has added some of the most seasoned corporate executives to its leadership board. These include former executives from Netflix, Microsoft, and Block. This is a move typically undertaken before a company goes public.
Discord is a name that the market closely watches. An IPO of a company with such interest could be a record-breaker. Things are expected to move rapidly as soon as an official announcement is made. Market participants expect an IPO to happen before 2023.
The renowned fintech star, Stripe promises to bring one of the most anticipated IPOs to invest in for this year. The company has gathered almost legend-like status amongst market participants, owing to its extremely attractive metrics. Stripe stands as the most valuable private startup in the United States, leaving behind Elon Musk’s SpaceX, and InstaCart. In April 2020, the company’s valuation was determined at $36 billion. In a mere two-year period, this had shot up by an incredible 160%, placing the company’s worth at $95 billion.
The services it offers have filled in a substantial gap in the digital market given its widescale acceptance. This is ascertained in almost 50 countries where its services are operational. Moreover, its list of clients includes some of the corporate world giants such as Google, Amazon, Microsoft, and Uber.
The Stripe IPO is expected to be unlike any other, given the sheer scale at which the company is operating. Stripe’s services are used by millions of businesses, both startups and Fortune 500, across the globe. The total volume of transactions processed is in the hundreds of billions of dollars. With its ability to cater to 135 different currencies, it comes as no surprise as to why this startup is achieving such soaring heights. For such a star player, every bull in the market would rush for a piece of its cake.
The story doesn’t end there for Stripe. Its most impressive factor remains its upside potential. The company’s expansion has been nothing short of mind-blowing. Its sights have recently turned to the potential of the European digital markets. Stripe has heavily invested in enhancing fintech, retail, and SaaS-related services for its European users. Moreover, it had launched operations in Britain, Germany, France, and the Netherlands. Similarly, it had recently undertaken expansive initiatives to penetrate the oil-rich and dynamic markets of the Arab Gulf countries. The company also has been very vocal about its ambitions to incorporate cryptocurrency processing into its platform within the near future.
An IPO could inject a substantial volume of finances into Stripe that would take it into a different ballpark entirely. The startup has been heavily involved in working toward reinforcing its enterprise leadership across the markets. Through the enhancement and addition of further enterprise capabilities, Stripe would be heavily improving upon its competitive position and financial sustainability. Moreover, there remains immense growth potential for Stripe’s treasury network of global payments. This is especially true for the emerging BRICS economies.
Stripe is a star player in the world of fintech, poised to trigger disruption of the traditional financial world. The IPO would likely be a game-changer for a startup with so many pros, which makes it a worthy enough IPO to invest in.
For anyone looking to approach an IPO to invest in, it would be critical to take into consideration the direction of the broader market. One area that has been seeing growing prominence is agri-food tech startups. Companies operating within this domain have been looking to revolutionize the food industry in an innovative, yet sustainable manner. The market also has immense upside potential. The Swiss investment bank, UBS remarked that sales in the plant-based meat market will grow to $85 billion by 2030. To put this figure into context, the entire market reported sales worth a mere $4.6 billion in 2018.
Impossible Foods is one such startup that is at the forefront of this change. Stories of its growth and success have stormed through the wider discourse, ever since its impressive debut in 2019. Through the use of the biomolecule, heme, Impossible Foods replicates the taste, texture, and nutritional value of actual meat, in a plant-based meal.
Impossible Foods’ market and financial performance in recent years clearly reflects its success story. Currently, the company sells its products at over 20,000 grocery stores and up to 40,000 restaurants. It also offers exclusive products through its partnerships with both Burger King and Starbucks. Similarly, in 2018, the company achieved an impressive 85% annual revenue growth. This highlights the rapid rate at which its novel products are seeing acceptance by the wider market.
In regards to its IPO, Impossible Foods’ CEO Pat Brown had shared his company’s motivations for the move, in a recent interview. He mentioned, “there are millions of non-billionaires out there who are very, very supportive of our mission but they don’t have a chance to share in our success. They would love to support the future of their planet and their kids and grandkids’ future, but they can’t invest in Impossible Foods. I don’t like that.” Based on this statement it seems highly likely that the company is fast-tracking its path to an IPO to invest in. This is definitely one that investors will be keeping an eye out for.
Companies that take the IPO route are often those that are highly successful and have their sights set on exponentially greater milestones. In many cases, IPOs offer investors the opportunity to share in the success of a potential gamechanger. Although not all are successful to this end, given the high risk they hold, some are truly golden opportunities. The three IPOs to invest in, discussed in this article are such that their hype will send shockwaves across financial markets. This is due to the unique opportunity each presents in different, dynamic growth markets.