The IPO market stumbled in 2022. Many private companies postponed their public debuts due to falling equity markets, rampant inflation, and geopolitical unrest. This trend persists in 2023, with IPOs in the US down 42% from 2022. Still, this leaves some promising IPOs to watch for observant investors.
Yet, against the odds, recent IPO stocks are performing well, defying market predictions. This success among new public companies hints at high-potential IPOs. As economic conditions and investor sentiment shift, the evolving IPO scene offers fascinating prospects for companies and investors.
Interest rates might dip in the year’s second half. This could ease fears of inflation and recession. Such an interest rate landscape may pave the way for potential trillion-dollar IPOs. Companies are watching closely, planning their offerings for maximum gain. Amid these dynamics, several deals are set to happen this year, stoking the anticipation for a friendlier IPO market.
Chime Financial
Last year, Chime Financial Inc., an online bank targeting young-adult customers valuated at $25 billion, postponed its IPO due to unfavorable market conditions. However, the fintech sector has experienced a significant rebound this year, exemplified by the impressive performance of the Ark Fintech Innovation ETF (NYSEARCA:ARKF), which has risen over 30% year-to-date. This resurgence in the market makes a debut by fall seem more plausible for Chime.
Despite the positive outlook, Chime may face the challenge of distinguishing itself from other app-based banks, such as SoFi Technologies Inc. (NASDAQ:SOFI). Although SoFi witnessed a remarkable 772% surge in first-quarter earnings, its market capitalization stands at only $5.4 billion. To achieve a higher valuation, Chime will need to showcase its unique qualities and persuade Wall Street to view it as a fast-growing tech company rather than simply a bank.
Furthermore, the resolution of the debt-ceiling standoff will play a crucial role in shaping market sentiment and determining whether Chime can attain a more favorable valuation. This makes it one of those promising IPOs to watch.
Arm
Arm Ltd., a promising IPO contender, gears up for its debut. The chip industry’s comeback, Softbank Capital‘s support, and investor interest in chip stocks will shape its success. We’ll learn more about Arm’s IPO plans and related market dynamics in the coming months.
Lastly, Arm’s backers at Softbank Capital are eager for substantial success to reinforce recent venture capital returns. Reports indicate that Softbank aims for Arm to raise $10 billion through the public offering, in exchange for an undisclosed stake. In September 2020, gaming chip giant Nvidia Corp. offered $40 billion in stock to acquire Arm, which Softbank had purchased for $32 billion in 2016. Although chip-stock indexes haven’t yet reached their late-2021 peak, they have shown improvement since then.
As Arm gears up for one of the promising IPOs to watch, the chip industry’s resurgence, the support of Softbank Capital, and the interest from investors in chip stocks will play a vital role in shaping its success. The upcoming months will reveal more about the specifics of Arm’s IPO plans and the overall market dynamics surrounding this anticipated move. Arm is then one of those promising IPOs to watch.
Stripe
Stripe Inc., a top online payment processor, delivers a seamless checkout experience via its SaaS platform. It offers a credit card payment gateway, simplifying online sellers’ transactions. Plus, it emphasizes security, blocking suspicious transactions and spotting fraudulent payments.
The company boasts an impressive roster of high-profile clients, including Amazon, Alphabet, Shopify, Lyft, and Twilio. More than 50 companies process $1 billion or more through Stripe’s network, and in 2021 alone, the company handled $640 billion in payments — quite big numbers considering PayPal processed $1.25 trillion during the same period.
Launched in 2009, Stripe enjoys the backing of notable personalities like Elon Musk, Peter Thiel, and Sequoia Capital. A 2021 funding round valued the company at $95 billion. With an estimated valuation of $74 billion in July, Stripe’s IPO could be among the largest ever.
Stripe’s robust growth, high-profile clientele, and substantial backing make it a payment processing titan. Hence, its potential IPO is eagerly anticipated in the market.
