Investing.com — 2024 could be a strong one for initial public offerings (IPOs), with several significant companies gearing up for their public debuts.
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Among the highly anticipated IPOs, three stand out: Reddit, Shein, and Stripe. As the IPO market gains momentum, these companies are expected to capture the attention of investors and industry experts alike, signaling potentially new investment opportunities.
Reddit IPO
The latest reports state Reddit is seeking a valuation of up to $6.5 billion in its upcoming IPO, with the company planning to value its IPO at between $31 and $34 per share.
The social media giant filed to go public in February. The company, which is said to be planning to launch its IPO in March, is aiming to trade on the New York Stock Exchange (NYSE) under the RDDT ticker symbol.
According to Gregory Sichenzia, founding name partner of Sichenzia Ross Ference Carmel, Reddit is “the only viable candidate” of the three IPOs, although he notes they face “many hurdles,” including its $6.5 billion valuation.
“It has previously offered stock privately at a $10 billion valuation. It now plans to offer stock to its users rather than institutions, which will pose additional trading risks and volatility,” Sichenzia told Investing.com.
Shein IPO
For Shein, a potential US IPO seems to have hit some roadblocks. Sichenzia notes the company “seems to have stalled its U.S. IPO and is now looking to other jurisdictions.”
The latest reports state the fast fashion retailer is considering the possibility of changing its initial public offering from New York to London. This is due to hurdles to listing in the US. The company was founded in China but is now headquartered in Singapore.
While the US is still the preferred destination, Shein’s links to China have drawn scrutiny from US lawmakers who have questioned the amount of control Chinese regulators have over the business.
If Shein were to switch its IPO to London, it would represent a much-needed boost to the London market, which has struggled to attract and keep big names in recent years.
Stripe IPO
For Stripe, the highly anticipated IPO has been the subject of intense speculation, with the company‘s $65 billion valuation said to suggest a public listing will not happen any time soon.
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Sichenzia states: “Stripe has just pegged its valuation at unreasonable levels and does not appear to be ready for an IPO any time soon.”
The company has reportedly secured deals with investors to offer liquidity to current and former employees at a $65 billion valuation via a tender offer.
The valuation represents a 30% increase compared to Stripe’s valuation last March, when it raised $6.5 billion at a $50 billion valuation. However, it is lower than the $95 billion valuation in March 2021.
How To Invest In An IPO
While the companies are intriguing, Sichenzia feels “the investment opportunity with all 3 of these are limited.”
Asked whether the IPOs serve as a bellwether for future and other Q2 offerings, he said he doesn’t think so, as there are “other more mainstream IPOs that better reflect the current IPO market.”
According to Sichenzia, institutional investors are currently “looking for profitable established businesses with real fundamentals rather than flashy start-ups with potentially huge upsides.”
Nevertheless, buying an IPO can be a complex process for retail investors. Investors will first need a brokerage account and ascertain that they meet the eligibility requirements of the IPO.
If they are eligible, the investor will need to express interest to your broker. However, it’s important to note that this doesn’t guarantee you’ll get shares, as brokers receive a limited allocation.
If the investor’s broker allocates them shares, they can place an order to buy them. Even so, it is essential to be aware of the offering price and the potential for stock price fluctuations after the IPO.
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In addition, once the IPO opens for trading, retail investors are able to acquire shares of the newly listed company in the open market, but they may miss out on any initial first day gains.
