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Initial public offerings haven’t exactly lit the world – or the financial markets – on fire in 2023. But as the old saying goes, a new year breeds new opportunities.
With 2024 right around the corner, investors certainly hope that’s the case with the IPO market. While there are a few more weeks to go, the data is dim for the first three quarters of the year. According to Ernst & Young, global markets saw 968 IPOs through Sept. 30 with $101.2 billion in capital raised, which represents a 5% decline in volume and a 32% decrease in proceeds from 2022.
In the U.S., the numbers are decidedly better, with 106 IPOs priced this year through Dec. 6, which is 49.3% higher than in the same period of 2022, according to Renaissance Capital. However, U.S. IPOs are still down significantly from the 397 priced during the same period in 2021.
“2023 has certainly been a tough year for IPOs, yet there is a lot of demand for new stock offerings,” says Phil Haslett, co-founder and chief strategy officer of EquityZen in New York. “There are thousands of unicorn companies sitting on the sidelines figuring out their next move.”
Haslett expects the IPO market to pick up in 2024. “We’re seeing better macro indicators,” he says. “We have job growth, we have strong GDP, and inflation is cooling. There’s an end in sight when it comes to interest rate cuts, and that puts us in a better position. Ultimately, a lot of these IPO companies are feeling a lot of pressure from both early investors and shareholders to achieve liquidity.”
In the meantime, what can investors expect on the IPO front currently and in the near future? Here are seven that make the list of recent and upcoming IPOs to watch now:
| Upcoming/Recent IPO | IPO valuation* |
| Shein | $66 billion to $90 billion |
| Panera Brands | $7.5 billion** |
| Reddit Inc. | $15 billion |
| Skims | $4 billion |
| Birkenstock Holding Ltd. (BIRK) | $8.6 billion |
| Maplebear Inc. (Instacart) (CART) | $9.9 billion |
| Arm Holdings PLC (ARM) | $54.5 billion |
*Estimates for Shein, Panera Brands, Reddit and Skims; others are initial valuations on a fully diluted basis at the time of the IPO.
** Based on 2017 acquisition price.
Shein
IPO valuation: $66 billion to $90 billion
In early December, word leaked that Chinese digital fashion brand Shein had filed confidential paperwork with the U.S. Securities and Exchange Commission to go public, presumably in early 2024. It is aiming for a valuation of up to $90 billion, Bloomberg reported, after being valued at about $66 billion in a fundraising round in May.
Shein is rewriting the book on going public, with the company relying more on its social media clout than robust financials or deep-pocketed investors to drum up demand for its stock. The company has about 31 million followers on Instagram alone, many of them being younger consumers attracted to the online retailer’s bargain prices and standout fashion options.
Drawing a bead on the ultra-secretive company’s financials isn’t easy, although the Wall Street Journal reported earlier this year that Shein raked in $23 billion in 2022 revenue, with $800 million in net income, earning the company high marks for fashion industry sales volume. The success of its IPO will depend on sustaining that performance.
“Those numbers set high expectations for its IPO,” says Seth Farbman, chairman and co-founder of Vstock Transfer, an SEC-registered stock transfer agency. “Despite concerns about environmental impact and allegations related to sourcing cotton from Xinjiang, Shein’s success could be a bellwether for other fashion companies considering IPOs in 2024.”
Panera Brands
IPO valuation: $7.5 billion
After months of on-and-off signals and layoffs of 17% of Panera Bread’s workforce, its parent company, fast casual restaurant platform Panera Brands, has quietly filed paperwork for its own IPO.
Last May, upon welcoming a new chief executive officer, former Einstein Bros. Bagels CEO José Alberto Dueñas, the company said it would use the new C-suite launch as a “preparation for its eventual IPO.” With the addition of new chief financial officer and IPO specialist Paul Carbone, now it looks like that day is coming to pass for Panera, which JAB Holding Co. – former owner of Au Bon Pain and current owner of Krispy Kreme Inc. (DNUT) – purchased for $7.5 billion and has held as a private company since 2017.
Panera’s IPO is intriguing, as it marks a significant transition from being part of JAB Holding to a potential public entity. “The back story involving a lapsed agreement with Danny Meyer’s SPAC, coupled with JAB’s consolidation of brands like Caribou Coffee Co. and Einstein Bros. Bagels under Panera, and the hiring of a CFO experienced in public transitions, all underscore the strategic nature of this IPO,” Farbman says.
“Panera’s public offering will not only reflect its market positioning but also serve as an indicator of investor sentiment toward the food and beverage sector,” he adds. The food service and food retailing industries supplied $2.4 trillion worth of food in in 2022, according to the U.S. Department of Agriculture.
Reddit Inc.
IPO valuation: $15 billion
Things seem to be heating up on the Reddit IPO front. The company is reportedly meeting with potential investors, and talk of a $15 billion valuation is percolating on Wall Street as 2023 draws to a close.
Reddit had planned on a spring 2023 IPO, but a combination of lousy performance of other IPOs, stubbornly high interest rates and a “downvote” call from investment giant Fidelity gummed up the works. Valued at $10 billion in 2021, Reddit saw financial services giant Fidelity Investments slash its valuation to $5.5 billion as of May 31, 2023.
Reddit filed its IPO paperwork with the SEC in December 2021, but it has held off on setting any public offering date. Company officials had expected to reschedule its debut sometime in the second half of 2023, but all had been quiet for a while regarding a Reddit IPO.
Now, Reddit looks like it will have a better chance to stick its IPO landing if a few more things go right.
“Reddit is a major player in the social media landscape, with a substantial user base (estimated at 56 million daily users in 2023), and could offer significant insights into the market’s valuation of digital community spaces and user-generated content platforms,” Farbman says.
The company’s decision to go public might be influenced by the market response to other major IPOs, such as Shein’s, which also has a massive social media presence. “The IPO will likely highlight key aspects such as the monetization of user-generated content, the balance between community integrity and commercial interests, and the overall sustainability of such platforms in the public market,” Farbman says.
Skims
IPO valuation: $4 billion
This direct-to-consumer apparel brand has co-founder Kim Kardashian reinforcing its brand, which no other recent IPO can claim. That’s a likely reason why 11 million would-be customers have signed up for product restock text alerts – a good sign for any digital retailer.
Company executives say the fledgling “shapewear” company is already making money, with an estimated $750 million in 2023 revenues, against $500 million in 2022, and with an estimated $190 million in net profits for 2023. The company is planning a 5,000-square-foot flagship store in Los Angeles and is planning more U.S. stores in New York and other larger urban cities that attract shoppers from all over the world – all of whom recognize the Kardashian name.
Skims’ IPO valuation was recently pegged at $4 billion, after a funding round netted $270 million earlier in 2023, setting it up as a unique IPO whenever it does show up on Wall Street’s publicly traded calendar.
“Skims bucks the trend of some of these other companies,” Haslett says. “They were just founded in 2019, so it’s a relatively young company with a valuation that’s rapidly growing.”
Having a strong brand name with a connection to Kim Kardashian certainly helps. “If Skims does an IPO next year, they would certainly be different than a lot of these 20-year-old companies that we expect to hit the markets,” Haslett adds.
Updates on Recent 2023 IPOs
Birkenstock Holding Ltd. (BIRK)
IPO valuation: $8.6 billion
Birkenstock only recently passed its IPO price, six weeks after the company first went public – it’s trading at $49.03 per share as of Dec. 5. That’s encouraging news for BIRK investors who saw the shares fall 13% on Oct. 11, on the company’s first day of trading.
Analysts are coming around on BIRK, with four out of five FactSet analysts issuing “buy” calls in the past month. Williams Trading analyst Sam Poser is also on the BIRK “buy” train, calling for a $60 price target, up from $55. He recently met with key Birkenstock executives who touted the company’s brand heritage and independence. The company has said it will bypass bigger corporate accounts like Amazon.com Inc. (AMZN) to keep a better grip on its brand reputation (it was launched in Germany in 1774, one year before the start of the Revolutionary War).
Maplebear Inc. (Instacart) (CART)
IPO valuation: $9.9 billion
Instacart, officially known as Maplebear Inc., made its public debut on Sept. 19 and shares have trended downward ever since, falling from its IPO price of $30 on its first day of trading to $23.73 per share as of Dec. 5. That’s 29.6% lower than its opening-day closing price of $33.70 per share.
The company’s service mission is simple. It enables freelance contractors to pick from grocery-shopping list requests in their area, fulfill the lists and deliver them to customers. The company is looking to juice its subscription base by offering Peacock Premium for free as of Nov. 30, hoping it can pair its grocery-delivery platform with NFL football games and holiday shows.
“Instacart+ helps deliver all of the snacks and beverages a Peacock viewer needs for a must-see TV night,” says Heather Rivera, Instacart’s vice president of strategy, partnerships and corporate development, touting the subscription offer.
With Instacart facing significant pressure from high-profile competitors like DoorDash Inc. (DASH), Walmart Inc. (WMT) and Amazon.com Inc. (AMZN), it’s going to have to do more than steer its customers to premium broadcast services as grocery-delivery competition heats up. Amazon, Kroger Co. (KR) and Walmart are offering their own home grocery-delivery services at steeply discounted prices, and Instacart risks losing market share that it might not win back.
IPO valuation: $54.5 billion
British chip designer Arm filed IPO paperwork with the SEC in late August and started trading on the Nasdaq Global Select Market on Sept. 14. It’s “so far, so good” with Arm, as its share price has risen to $63.59 per share as of Dec. 5, and it’s up 18.9% in the past month.
There’s a positive vibe coming out of Arm these days that’s underlining the growing attraction for the company’s stock. The chipmaker recently rolled out its new Cortex-M52 microchip processor that can run AI apps on Internet of Things devices. Arm also has a new production partnership deal with industry leader Nvidia Corp. (NVDA) that will see it supply chips for personal computers.
Arm’s initial post-IPO earnings report revealed a 28% boost in revenues on a year-to-year basis, with earnings per share of 36 cents, in line with analysts’ estimates. Wells Fargo gave ARM shares a boost with a recent “overweight” rating on the stock, along with a $70-per-share price target.
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