Best upcoming US IPOs to watch
The US has remained the most popular destination for IPOs in 2019, and its listings have also raised the most money. This was despite lower investor interest in high-risk, high-growth stocks. Let’s explore some of the 2020 listings to watch.1
Airbnb (estimated market cap: $38 billion)
Airbnb is an online booking space for accommodation, primarily based on the principle of home sharing. It has confirmed that it is ready to go ahead with a 2020 IPO.
According to internal valuations, Airbnb is likely to be valued at around $38 billion when it lists. However, this figure may not reflect the true value of Airbnb stock to the customer, as there has been a lot of media hype surrounding the IPO. If the listing is confirmed at this valuation, Airbnb will have one of the largest market caps in the travel industry.
Starlink (estimated market cap: $33 billion+)
Though a date has not been confirmed, rumours surrounding a 2020 Starlink IPO surfaced after SpaceX – its parent company – announced plans for a listing in the future. Starlink is a satellite network aimed at providing global internet access at very high speeds.
The IPO valuation will depend on market conditions at the time of the listing and the performance SpaceX, which was estimated to be worth $33 billion in May 2019.
Robinhood (estimated market cap: $5.6 billion)
Robinhood has been open about its plans to launch an IPO. The firm originally started as a stock trading app but it has since expanded into other services, with cryptocurrencies proving particularly popular.
Any IPO will be part of a wider plan to become a full-service finance company over the next couple of years. Securing the support of investors, particularly as skepticism over cryptocurrency trading remains high, could be the biggest barrier to getting the company ready for a public listing.
Postmates (estimated market cap: $2 billion)
Originally expected to list in 2019, delivery services company Postmates has delayed its IPO due to shaky market conditions.
Its chief executive officer (CEO) revealed that the company is keeping a close eye on the economy and the performance of other high-profile IPOs before making a decision. Uber and Lyft, among others, have all performed poorly since listing – despite sky-high market valuations. Postmates is expected to list on the New York Stock Exchange with a valuation of more than $2 billion.
Eaze (estimated market cap: $500 million)
Speculation surrounding an Eaze IPO has been rife since 2018, but the marijuana delivery service might finally list its stocks in 2020. Of course, the possibility has sparked a lot of interest among traders and investors – especially following the major expansion of the cannabis industry over the past three years.
Eaze predicted it would achieve $1 billion in revenue by 2020, but it’s yet to reach $500 million in transactional value. This could have an impact on the date as well as the final valuation of the IPO. Over the longer term, Eaze’s success will depend on its ability to keep up with the fast-changing cannabis and tech landscape.
TowerCo (estimated market cap: €20 billion)
TowerCo has more than 61,000 mobile towers, across 10 countries, connected to its business.
The company is seeking an IPO as part of Vodafone’s plans to monetise its tower assets. Vodafone could make billions from the listing, which it needs to pay off debt. Vodafone has not released much information about the listing, but it has been rumoured that the valuation could be up to €20 billion. The outlook for TowerCo is positive as Vodafone has projected €1.7 billion in annual revenue for its tower business.
Ant Group (estimated market cap: $200 billion to $300 billion)
Ant Group is a financial technology group, closely associated with Alibaba – the Chinese online retail giant. Ant Group is eyeing a stock market debut in Hong Kong and Shanghai, and the company is said to be targeting a $30 billion share sale, with a valuation of between $200 and $300 billion.
Filings released in August 2020 revealed that Ant Group had made around $2.6 billion in net profit for 2019, and it is aiming to sell between 10% and 15% of its shares. If the company achieves its $30 billion target, it will be a more successful listing than the historical Saudi Aramco IPO last year.
ByteDance (TikTok) (estimated market cap: $75 billion to $100 billion)
Chinese start-up ByteDance became a household name after launching its famous TikTok app in 2017. The public is eagerly awaiting a 2020 IPO, which is said to be valued at around $75 billion. The company started posting a profit in June 2019 and reported revenue of more than $20 billion in 2019. It relies heavily on advertising for income, but it is always looking to develop new products that could fortify its revenue stream.
But, in July 2020 it was revealed that the company may abandon an international listing, opting instead to list its Chinese business on an exchange in Hong Kong or Shanghai. It’s currently unclear how this would affect the company’s value ahead of a listing.
Barbeque Nation Hospitality (estimated market cap: ₹10 billion to ₹12 billion)
Barbeque Nation Hospitality, launched in 2005, owns one of India’s biggest restaurant chains. Besides being a big name in the country, it also has a presence in the UAE, Oman and Malaysia.
An IPO of approximately ₹10 billion to ₹12 billion (roughly £105 million to £125 million) is expected in 2020, with the funds raised said to be used to build new restaurants, repay debts and fund general operations. The share price has been rumoured to float at ₹5.
Best upcoming UK IPOs to watch
The year 2019 was a mixed year for the London initial public offering (IPO) market. There were fewer listings than in 2018, but valuations and share prices have generally been higher. Much of this boils down to Brexit, with companies reluctant to enter the market at a time when investors are nervous.
However, with the UK-EU transition period ending on 31 December 2020, the IPO landscape might change. Let’s explore some of the 2020 listings to watch.1
Asda (estimated market cap: £8 billion)
Retail giant Walmart is strongly considering an IPO of Asda, one of its subsidiaries, following the collapse of a proposed Sainsbury’s deal. Its focus will be on customer value and experience in the next few years, in an effort to differentiate itself from competitors such as Aldi and Lidl.
The listing would give Asda the opportunity to pursue its own strategy while retaining access to Walmart’s buying power. No exact date has been set for the IPO, but it has been reported that Asda could be valued at up to £8 billion.
SDIC Power (estimated market cap: $10 billion)
Chinese energy firm SDIC Power is heating up for a 2020 London IPO. SDIC invests in, constructs and operates electric power plants. It also works on alternative energy solutions, such as hydropower.
Reports state that the business wants to raise up to $1 billion from selling 10% of its share capital as Global Depositary Receipts on the London Stock Exchange.
Deliveroo (estimated market cap: £3.2 billion)
Deliveroo is a food-delivery startup headquartered in the UK, with operations across the world. It has hinted at a 2020 IPO after short-lived talks about a merger with Uber collapsed.
Deliveroo’s last funding round valued the firm at £1.6 billion (in 2018). Its most recent investment – £459 million from Amazon – may have given the business the momentum it needs to reach its new valuation target of £3.2 billion. Many reports state that Deliveroo’s focus is on growing the business and reaching new customers, not an IPO specifically.
McLaren Group (estimated market cap: £2.5 billion)
McLaren Group, the British Formula One firm and sports car maker, has been linked to an IPO since 2011.
Following Aston Martin’s listing in 2018, the head of McLaren’s automotive division confirmed that it was not going to follow suit just yet. That’s because the environment for car makers was very volatile with Brexit impacting supply chains and the trade war raising the cost of doing business.
Jaguar Land Rover (estimated market cap: £2 billion)
Jaguar Land Rover (JLR) is part of India’s Tata Motors and long been rumoured to be considering an IPO.
Optimism surrounding the car company’s listing has dwindled as a result of delays to Brexit, declining diesel sales and a drop in Chinese demand. Tata Motors shares experienced their biggest fall on the Bombay Stock Exchange in 26 years after announcing a £3.1 billion write-down of its investment in JLR. It could be that the business is simply waiting for Brexit tensions to ease before pursuing the IPO, which could see JLR valued at up to £2 billion.
BrewDog (estimated market cap: £1 billion)
BrewDog, a famous craft beer brewer, announced in 2018 that it is considering an IPO by 2020, but it was awaiting the right market conditions.
The IPO would give current stockholders an opportunity to cash in on their investment and provide some longer-term liquidity for the business. BrewDog is said to be eyeing a London listing, but a US listing has not been ruled out completely. The last estimated valuation (in 2017) was £1 billion.
Saudi Aramco (estimated market cap: $1.88 trillion)
Saudi Aramco is the world’s largest oil and gas company, based on both revenues and profit. The corporation produces around 10 million barrels of crude oil per day, which accounts for 15% of the world’s oil supply. Saudi Aramco’s listing overshadowed every IPO in history, with a final valuation of $1.88 trillion. Shares floated at SAR32.00 and shot up to SAR35.20 on the day of the listing – up by 10%.
Uber (market cap: $69.7 billion)
Uber, a ride-hailing company founded in 2009, listed on the New York Stock Exchange in May 2019, with a valuation of more than $69.7 billion.
Shares floated at $45 but were down by more than 7% at the end of the first trading day. The company remains positive about its future success – citing the role of its smart technology to further its offering.
Lyft (market cap: $22 billion)
Lyft – one of Uber’s taxi-app rivals – listed on the New York Stock Exchange in March 2019, with a final valuation of just over $22 billion.
Shares floated at $72 and closed the first trading day at $78.29. The Lyft share price has not performed very well since the listing, but the company is said to have benefited from the reputational damage that Uber has suffered.
Slack (market cap: $19.5 billion)
Slack is a software company that opted for a direct listing on the New York Stock Exchange in June 2019, reaching a final valuation of $19.5 billion. Shares opened at $38.50 and closed slightly higher at $38.62. Slack faces a lot of competition from companies such as Microsoft and Facebook, causing the share price to decline by roughly 47% from June 2019 to November 2019.
Peloton (market cap: $7.7 billion)
Exercise equipment maker and media business Peloton listed on the Nasdaq (US Tech 100 with IG) in September 2019, with a valuation of $7.7 billion.
Shares floated at $27 a piece but were down by about 7% at the end of the first trading day. Peloton is working on expanding its offering in the US and UK and will also be launching in Germany.
Cloudflare (market cap: $5.2 billion)
Cloudflare listed on the New York Stock Exchange in September 2019. The company’s cloud-based software is known for making internet content load faster. It also provides other services such as cyber security.
Its first trading day was quite successful after shares reached a high of $19.53 and closed 19% higher than its opening price of $15.
Virgin Galactic (market cap: $2 billion)
Virgin Galactic is a space flight company linked to the Virgin Group. It listed on the New York Stock Exchange in October 2019, but not through a traditional IPO.
It merged with shell company Social Capital Hedosophia Holdings Corp, with the deal having an equity value of approximately $2 billion. The stock lost 21% of its value on the first trading day, closing at $9.35 a share.
Trainline (market cap: £2 billion)
One of the largest coach and rail platforms in the UK and Europe, Trainline, listed on the London Stock Exchange (LSE) in June 2019, reaching a valuation of roughly £2 billion. Shares floated at 350p but rose by about 18% by the end of the first trading day. As a next step, Trainline plans to increase its presence across Europe, after which it may want to consider other travel industry verticals.
How to trade an IPO
There are two ways to trade and IPO – before the listing, and after the listing.
Before the IPO
If there is a lot of interest in a particular IPO, IG may offer a ‘grey market’ before such IPO is held. This means you can speculate on a company’s share price before it lists. The grey market price will be based on our prediction of the company’s market capitalisation at the end of the first trading day.
With a grey market, you would:
- ‘Buy’ if you think the market cap will be higher than the grey market price
- ‘Sell’ if you think the market cap will be lower than the grey market price
After the IPO
Once the company has listed, there are many ways you can attempt to profit from the IPO. As with all stock markets, you will be able to:
- Go long or short on shares by CFD trading
Ready to get started? Open a live IG trading account
How can you trade upcoming IPOs?
With IG, you can trade upcoming IPOs before the listing – if a grey market is available. A grey market enables you to speculate on the company’s share price before the IPO.
If we offer a grey market, the price will be based on our prediction of the company’s market cap at the end of its first trading day. You’d ‘buy’ if you think the market cap will be higher than the grey market price at the end of the first trading day, or ‘sell’ if you think it will be lower.
How soon can you buy and sell IPO shares?
You can buy and sell IPO shares as soon as the company lists on the stock market. You can speculate on share price movements by CFD trading.
1 Final IPO valuations are established on the first trading day.