The U.S. IPO market was brutal last year, only generating a very lackluster $7.7 billion of funds for the entire 12 months. That was “the worst year on record” for IPOs, according to Kiplinger. But now multiple, large IPOs are on the way. Among the huge names whose shares are going to be listed soon are grocery delivery service Instacart and computer chip designer ARM Holdings (NASDAQ:ARM). Also noteworthy, Goldman Sachs (NYSE:GS) Chief Executive Officer (CEO) David Solomon reported that his firm was working on a number of large IPOs, which were in good shape.
Also upbeat about the IPO market was investment bank Renaissance Capital. In July, Renaissance wrote, “We believe the summer IPO market is poised to capitalize on several positive developments from the past quarter: The pause in rate hikes, the pickup in larger deals at quarter end, and improving returns, with the Renaissance IPO Index up 32% year-to-date.”
For investors looking to profit from the much-improved IPO market, here are three upcoming, hot IPOs to watch.
Instacart
U.S. grocery delivery service Instacart is seeking to raise as much as $616 million and achieve a valuation of as much as $9.3 billion. The firm expects its shares to initially sell for $26 to $28 each.
Encouragingly, a number of Instacart’s largest investors have agreed to purchase “up to $400 million worth of shares sold in the offering,” Reuters reported. That indicates the largest investors in the company, likely very well-versed in its current performance and outlook, have decided to buy much more of its stock through its IPO. Of course, the investors’ enthusiasm bodes well for the future performance of Instacart and its shares. Moreover, their purchases of a high percentage of the shares available should put upward pressure on the share price in the wake of the IPO.
All of these factors certainly make Instacart, whose shares are expected to begin trading next week, one of the hot IPOs to watch.
ARM Holdings (ARM)
Chip designer ARM Holdings launched its IPO on Sept. 13, and its shares are slated to begin trading today. Japanese investment bank SoftBank Group (OTCMKTS:SFTBY), which owns ARM, “priced its IPO at $51 per share, at the top of its indicated range,” Reuters reported. The company obtained $4.87 billion from the deal, which values ARM at $54.5 billion.
According to Reuters, several of Arm’s top customers, including Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), have agreed to buy significant amounts of the stock. Their willingness to buy the company’s shares validates its offerings and the outlook of ARM stock.
Impressively, Arm predicted its top line will increase 11% this year and about 25% next year, driven by the proliferation of artificial intelligence (AI) and data centers.
Klaviyo
Klaviyo developed a marketing automation platform. The company seeks to attain a valuation of $8 billion and a share price of $25 to $27, with an aim to raise as much as $518.4 million. Its shares are expected to debut next week.
Klaviyo’s founder and CEO, Andrew Bialecki, currently has a 38% stake in the company, so he’s certainly very well incentivized to work hard to boost the share price, assuming he holds onto a significant amount of his holdings following the IPO. Another major investor in Klaviyo is Shopify (NYSE:SHOP), the e-commerce giant.
Klaviyo should be able to utilize AI to greatly enhance the performance of its marketing platform.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
