Health & Wellness

Top 3 IPOs to Watch in Q4 2020

  • Juwan Richards

    Juwan's focus is on the intersection of investing and media. Simply defined as a creative with an appreciation for curating content that audiences can both learn from and enjoy. As a buy-and-hold investor, Juwan is a trend-spotter and likes to invest in companies at the ground level. As an avid believer of Web 3.0, his strategy consists of finding companies with a unique competitive advantage and interpreting their market sentiment within the retail audience.

    View all posts

Read on to find out 3 of the top IPOs to watch in Q4 2020… 

Airbnb has now filed for an IPO, looking to regain a valuation of around $30B and raise $3B in proceeds from the transaction. They’re looking to make IPO paperwork public as early as next week, despite the hugely negative effect COVID-19 has had on their trajectory and the currently rising global infection rateIf IPO registration does open next week, this could see the vacation rental platform openly trading on the stock market in December 2020. 

At face value, this seems like an extremely poorly timed move for the peer-to-peer vacation platform, as revenues were down 67% in Q2 of 2020, reporting a $400M loss over the period. Prior to their announcement to go publicAirbnb’s private valuation put them at $18B, down from their 2017 valuation of $31B; however, the company has stated that July 2020 saw over one million daily bookings through their platform, bringing them back up to pre-pandemic levels in activity and, they hope, in valuation.  

Before the second wave of the virus resulted in refreshed travel restrictions, local and national travel was being encouraged in some areas of the world (including Canada), with the younger, tech-savvy demographic being the most likely to travel. Since this demographic already typically prefers using the tech platform to hotels and other formal lodgings, Airbnb’s boost could have come in large part due to them; the question, however, is whether this jump in daily bookings has been sustained over time. For this reason, investors are looking to the impending S-1 documentation from Airbnb before making financial predictions. 

Airbnb is planning an early December roadshow to get in front of investors and establish an IPO price range, with public market trading expected to ensue later in the month.  

While many planned IPOs have been delayed or canceled due to market volatility and the beaten-up state of the tourism industry, Airbnb seems not to mind. The company could be leaning into the public market optimism that seems to be propelling tech stocks in the latter half of 2020, in addition to the latest market rally that could set a positive precedent for Airbnb’s financing. As a year-over-year growth company that has created a new norm in the vacation industry, a 2020 IPO could mean favourable returns for early investors in the company – if, of course, they can weather the storm through COVID and the concurrent recession. 

Seemingly endless news is coming forward about the trading platform, Robinhood, and the onslaught of rookie investors it brings to the market. As arguably one of the biggest PR ‘winners’ from the pandemic, Robinhood has been savouring its newfound status as a market disruptor throughout 2020. While speculation of a Robinhood IPO has been circling for some time, the company’s founders have pledged to pursue the public market, with recent financing bringing up renewed excitement of the promise. 

As one of the largest unicorns left in the private market, newly minted investors using the Robinhood platform to trade prove to be the perfect catalysts for a successful IPO, leaving many investors impatient for a public debut. While no specific details of a public deal have yet been announced, the latest $200M financing round is supposed to help improve Robinhood’s products and customer experience (and potentially fund an expansion to the UK), in what’s likely a final push for growth prior to public filing. 

With a total of $1.7B raised in funding thus far and a record 3 million new users acquired in the first quarter of 2020, Robinhood’s extremely sticky user base is expanding rapidly and proving to be quite a momentous force in the markets. As companies gain attention through major media outlets, Robinhood investors are establishing new support levels, seeing “volatility and market downturns as buying opportunities”, according to Co-founder and Co-CEO Vlad Tenev. 

The platform made headlines by becoming the first zero-commission platform in capital markets, though it was quickly followed by some of the other major players. Since that time, Robinhood has grown to become one of the most popular trading platforms by lowering the barrier to entry for new investors, while simultaneously focusing on educating this group. 

With its latest Series G private funding round valuing the company at $11.2B US by D1 Capital Partners, this upcoming IPO will be one to watch. 

Few industries have capitalized on the pandemic as successfully as food delivery services. As the industry (as a whole) grows and establishes, competition stiffens between platforms such as GrubHub, Uber Eats, DoorDash, and more. With that said, competitors are seemingly not the only threat to these businesses as of late. 

DoorDash is one member of a suite of companies that aggressively lobbied to pass Proposition 22 (colloquially called “Prop 22”) in California this past week. This bill exempts the company from a new labour law that would require it to classify its delivery drivers as employees, rather than contractors. Among those who would have been affected are contractor-reliant giants Uber and Lyft, which saw an intraday stock price jump of 15% and 11%, respectively, following the news. With this positive news ahead of DoorDash’s planned IPO, the company can expect to secure more favourable financing, with CEO Tony Xu calling passage of the measure “a win for customers, drivers, and restaurants.” 

While profitability is still a massive concern for the business amidst a backdrop of intense competition, the passage of Prop 22 has alleviated a major concern about increased labour costs, prior to public filing. This win could be the push that DoorDash needs to establish a set timeline for its IPO, which remains to be seen. 

In June 2020, DoorDash raised an additional $400M at a valuation of $16B – up from its $12.6B valuation in May 2019 – securing its place among pre-public unicorns. Additionally, DoorDash is the current leader in terms of US sales, earning 44% of US meal delivery sales (according to analytics firm Second Measure). 

With large industrial backers such as SoftBank and Sequoia in the mix, the company has raised a total of $2.5B over its life (according to Crunchbase), securing its place as an aggressive delivery competitor focused on growth and market share, rather than profitability. 

While ongoing financial implications from the pandemic leave investor sentiment toward the company rockyDoorDash’s impending IPO is likely going to be one of the biggest public market events on the horizon. 

Want to Stay Informed in Real-Time?

While these are three high-profile IPOs, there are dozens more (of varying sizes) that are preparing to make their entrance into the stock market. The best way to stay informed about new public listings is to sign up for our Edge Text Alert list. 

We are constantly evaluating upcoming deals, large and small, and have a few coming up that we are particularly excited about. 

The last IPO we informed our audience about was the Very Good Food Co. (CSE: VERY) (OTCQB: VRYYF) (FSE: 0SI), which has grown more than 15x since its IPO. Most of the time, the course of one day can make a world of difference: by the end of its first day on the market, VERY was already up over 75% 

While our email subscribers heard about the stock at the end of the week, members of the Text Alert List were the first to know. 

  • Juwan Richards

    Juwan's focus is on the intersection of investing and media. Simply defined as a creative with an appreciation for curating content that audiences can both learn from and enjoy. As a buy-and-hold investor, Juwan is a trend-spotter and likes to invest in companies at the ground level. As an avid believer of Web 3.0, his strategy consists of finding companies with a unique competitive advantage and interpreting their market sentiment within the retail audience.

    View all posts

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