The upcoming IPO market looks to stay super hot in 2021 with hundreds of companies looking
to go public during the year. Today, we’ll look at 7 companies that are expected to generate
a lot of interest, make a lot of money and ones that I expect to come out early in the
year. If you’re always looking for the next big company to invest in, this video is for
you! Welcome to the Healthy, Wealthy, and Wise
channel where we focus a lot on IPOs. In fact every week, we have our featured, IPO This
Week episode where we talk about ALL the companies that we know are going public for the upcoming
seven days…it’s really just a great way to stay up to date on all the IPOs coming
out. For many of you, you’ve been with me for a while, and as always, I want to thank
you for checking in every week. And for those of you here for the first time, my name is
Kevin. And if you’re into staying on top of all of the companies hitting the market,
this channel might just be what you’re looking for, so definitely considering subscribing
and turning on the notification bell, that way, you won’t miss any videos as soon as
they come out. So while it’s common for people to say how
excited they are that it’s almost 2021, I’m not going to do that and go on about
how rough 2020 was, because 1, we all experienced it and know it, but 2., because IPOs were
one area that was far from rough; there was a ton of money being made on them. And 2021
is setting up to be another strong year for IPOs. And today, we’re going to focus on
some of the top IPOs that we know are moving along in the process and are expected to go
public early in the year. Some of the companies on the list we know more about because they’ve
already released their filings to the public, while others haven’t gotten that far yet.
But keep in mind that, as of this recording, we don’t have trading dates and expected
pricing ranges on any of the seven companies that we’re gonna talk about. But as I always
do, I’ll keep you updated on this information in either dedicated videos on a particular
company, on episodes of IPO This Week or in a community post. So let’s get into our
list of companies we expect to go public sooner than later, as all have either filed publicly
or confidentially with the SEC. The first two are ones we talked about before
on the channel and had expected them to come out before the end of 2020. But with the huge
discrepancy between the IPO price and where the stock eventually traded on the market,
particularly in the wake of Airbnb and DoorDash’s IPOs, these companies delayed going public
until they were sure they were getting a fair price for their shares at the actual offering.
The first of these 2 companies is Affirm, a company that is known by its ‘buy now,
Pay later’ approach where, unlike a traditional credit card, you don’t have to pay compounding
interest that can significantly up the overall cost of the purchase. What Affirm does is
tell you at the point of sale how much you will ultimately pay using simple interest.
So when you’re ready to buy something, you are told upfront what you will ultimately
pay for it within a time frame that is agreed upon, with no late fees, and again, no compounding
interest. So basically what they’re trying to do is turn the traditional credit card
model upside down. To give you an example from the company itself on how their model
works, when you’re ready to buy something like shoes, at the time of sale, you are told
upfront what you will ultimately pay for it within a time frame that is agreed upon. The
balance on what you owe doesn’t go up if you miss a payment or if you elect to pay
it all at the very end of the term. So in the example, you can see that you can end
up paying a lot more money if you use a traditional credit card versus Affirm. Now we can talk
about how it’s best to never pay any interest or finance charges on something we buy, but
we know that the reality is that a lot of people either can’t or choose not to do
this, so the option of Affirm could be a good alternative to using a traditional credit
card. So that’s what the company does, which does
sound intriguing, right? Well I got another piece of information that many tech investors
will like as well, and that is that Affirm was founded by Max Levchin, one of members
of the now infamous PayPal Mafia, the group of people who made PayPal a success before
moving on to start other successful companies…and some of those names include Elon Musk from
Tesla and Peter Thiel, who we talked about when Palantir went public. So with that record,
Levchin’s involvement alone will generate interest from investors.
Also going for them is that they’ve been growing fast. For the fiscal years ended June
30th for 2019 and 2020, their total revenue had year-over-year growth of approximately
93% reaching $509.5 million as of June 30th, 2020. Now from their filing, one potential
concern is that 28% of their revenue had come from Peloton, so that’s a lot of concentration
in one customer which adds risk to the equation. As we get into the new year, we should get
a clearer sense as to when Affirm could hold their offering. One thing that we do know,
is that when Affirm starts to trade, it’ll be under the ticker AFRM.
Now the second company that delayed its IPO until 2021 was Roblox, which is among the
world’s most popular gaming sites for children and not surprisingly, has experienced big
growth during the pandemic. In fact, its key metric of daily active users jumped 82% to
31.1 million in the nine months ended Sept. 30 from the same period a year earlier. For
some background on their product, the Roblox Platform is not only for users of the platform,
which we’ll get to in a second, but it allows access to millions of developers and creators
to build and operate a vast number of 3D experiences. According to the Sensor Tower Game Taxonomy,
Roblox is the clear leader in the Simulation genre in the United States.
So how the platform works, is when users sign up for Roblox, they can create an avatar and
explore the vast majority of the game experiences for free, although the business model for
any given experience is ultimately up to its developer. Most free experiences allow users
to spend what they call Robux by purchasing experience-specific enhancements. Users can
also use Robux to purchase items such as clothing accessories and simulated gestures from their
Avatar Marketplace. Roblox retains a portion of every Robux transaction and distributes
the rest to its developers and creators. Users can buy Robux in two ways, as one-time purchases
or through Roblox Premium, a subscription service that is billed monthly and includes
access to exclusive in-experience benefits, discounted marketplace items, and the ability
to buy, sell and trade certain Avatar items. To capture that revenue, Roblox accepts payments
through app stores, credit cards, and prepaid cards.
Looking at the financials, revenue grew 139% in the year ended December 31, 2018 and grew
another 56% to just under a half a billion dollars in 2019. And more recently, revenue
grew 68% to $588.7 million for the nine months ended September 30, 2020, meaning that the
first 9 months of 2020 generated more revenue than the whole of 2019. Now this, of course,
doesn’t mean the company is profitable, which is the case for the majority of IPOs.
From 2018 to 2019, Roblox actually did cut their net losses down by over 10% to $86 million.
However, their net losses grew substantially through the first 9 months of 2020 as they
focused hard on growing, reaching a loss of over $203 million.
Again, we don’t know when the IPO and trading will actually occur, but when it does it will
be under the ticker RBLX. From the comments in prior videos, I know there is a lot of
interest in Roblox so I am planning to do a dedicated video on them as we do get closer
to their IPO. One of the questions I’ll try to answer for us on Roblox is if we think
they can maintain the gains in usage from the pandemic and continue to grow upon them.
It’ll also be interesting to see what pricing terms they come up for the IPO after the delay.
Okay moving on, we have 2 companies that have filed their registration statements publicly
which did not delay their IPOs; they were always looking at coming out after the New
Year in 2021. The first is from a name that would be very familiar to any pet owners,
Petco. Now if you’re asking yourself, “weren’t they already public?”, well it would be
understandable to wonder that because they had been public twice before, ultimately being
taken back private both times. Now this time, they look to go public as they are another
company that has benefited from the pandemic. In fact, in the 10 months ended October 31st,
Petco’s net sales rose 9% over the same time a year ago, and that jumps to 16% when
looking at the most recent quarter, the biggest increase in a period of eight straight quarters
of comparable sales growth for Petco. The company is now looking to go above $5 billion
in sales this year. Petco states in their filing that the number
of households with pets was expected to increase by 4% this year alone, with that resulting
in $4 billion in new demand for pet care products. While Petco has seen growth from a strategy
of modernizing many of its 1,470 brick and mortar stores and focusing more on online
sales, the company still has a pretty hefty amount of debt, in fact over 3 billion dollars.
The purpose of the IPO will be to help pay down that debt, but there will still be a
lot of it left and that might turn investors away, especially for a company that won’t
come across as the next big thing in tech. Another focus for the company is on expanding
its full-service veterinary hospitals across the country to provide expanded service coverage,
and they’re doing this by integrating these veterinary hospitals into their existing pet
care centers. And as you or anyone you know that has a pet will tell you, these services
don’t come cheap and could be a significant factor in future revenue growth.
So for anyone interested in investing in the company’s IPO, when the time comes for the
company to hit the market, it will trade under the ticker WOOF. I have to admit, I do like
a well thought out ticker symbol like Petco is usings.
Another company that we have seen a public filing for is Poshmark. For anyone not familiar
to the company, Poshmark is a peer-to-peer Online fashion marketplace that says it looks
to empower people to sell a few items or to become successful entrepreneurs by providing
them with end-to-end seller tools. The company was founded in 2011 and says that
its users spend an average of 27 minutes a day on its marketplace. And as far as the
number of users on the platform, as of September, it had 31.7 million active users with 83%
of them being female, of which 80% belonged to either the millennial or Gen Z generations.
Poshmark believes it’s set themselves up to do well in three key trends that they see
driving the future of retail by these younger generations: one is the continuing shift to
online shopping, two, the shift to buying secondhand items, and three, the social aspect
of fashion and shopping. And to the social aspect, it considers itself a social marketplace
where it uses features typically found on social media sites, including “likes”
and “comments” to foster engagement. The company said there were more than 56 million
social interactions on the marketplace each day in 2019, with social interactions per
active user up 34% compared with 2018. As for market opportunity, a recent Cowen
& Company report cited on MarketWatch forecasts that shoppers will spend 52% more on secondhand
items over the next five years, with online resale expected to grow from $7 billion in
2019 to $37 billion by 2025. Within that market, Poshmark counts Amazon, eBay, Etsy, Facebook,
Mercari, Shopify, T.J.Maxx, and Walmart as competitors.
Currently, they make their money by charging a fee of 20% of the final price for sales
$15 and over, or a flat rate of $2.95 for sales under $15. This leads us to their financials,
where Poshmark is showing a profit for the 1st 9 months of 2020 after posting net losses
of $14.5 million in 2018 and $48.7 million in 2018 and 2019. The company also reports
it had $192.8 million in revenue for the nine months ended in September, compared with $150.5
million in the same period a year ago. Now with their filing already released publicly,
I do expect this IPO to happen relatively soon. And once it does, and begins to trade,
you can find it trading under the symbol POSH. Before we move on, I would like to ask you
to please push that like button if you’re enjoying this video, it’ll let me know that
you enjoy seeing preview types of videos. Most of the time, I’m so focused on the
week ahead that I don’t always look further into the future…so if I know a video like
this is something you enjoy, I’ll definitely make more videos like this.
So let’s now jump to a few companies that we know have filed confidentially, which means
we have yet to see any key financials or data from the company other than from some reports
floating out there. However, by knowing that they did file confidentially with the SEC,
I do know that they’re definitely on track to go public with an IPO sooner than later;
so talking about these companies going public is more than just wishful thinking on my part,
they’re definitely on a path to start trading early in 2021.
So with that in mind, the first company with a confidential filing is one that looks to
benefit from the recent meteoric rise in the value of Bitcoin and that company is Coinbase.
Coinbase was founded in 2012 as a simple way for people to buy Bitcoin where the company
initially made most of their money by charging trading fees. But the company has now evolved
to become a conglomerate of crypto-related businesses, particularly in buying custody
operations, which involve charging clients to safely store large amounts of crypto. To
give you an idea of how the company could be valued, in October of 2018, the company
was valued at $8 billion, so we’re definitely expecting a higher number than that once they
get to their IPO. One of the big and intriguing questions out
there is how Coinbase may go public. While they could go the traditional IPO route using
underwriters, there’s a strong belief that the company could go the direct listing route,
particularly with new rules on raising new capital just recently approved by the SEC.
Even without the new rules, the company could still choose to go with a direct listing,
not because they are looking to raise capital, but just so the current owners of its private
shares could have a way to increase their liquidity by having their shares open to the
public markets. Another option that’s been floated is for
Coinbase to go public through an offering involving digital tokens on a blockchain—the
ledger technology that underpins Bitcoin, and which crypto supporters view as the future
of financial infrastructure. While I don’t see that likely just because of the barriers
it would have with the current marketplace, I think it was important to mention the possibility
since Coinbase’s co founder Fred Ehrsam told Fortune in an interview that the company
is “spiritually” built to go public this way. Whatever is decided upon with Coinbase,
I have to believe that this is one company that’s going to be interesting to watch
as they make their move to go public. Another company with a recent confidential
filing for an IPO is Bumble. If you haven’t heard of Bumble, they are the company with
the very popular dating app of the same name that allows women to make the first move when
it comes to making a connection. While their offering is primarily known as being a dating
app, their products also include Bumble BFF, a matching service for friends, and Bumble
Bizz, which comes across as being similar to LinkedIn where professionals can network.
The company was founded by Whitney Wolfe Herd, who previously co-founded Match's popular
Tinder app. In 2014, she left Tinder and filed a sexual harassment lawsuit which was settled
later that year. Not long after that, she founded Bumble, an app that’s purpose was
to lead to less pressure and more empowerment of women by only letting women users initiate
conversations in heterosexual matches. Matches are made by using the swipe method that became
popular with Tinder, and that led to more lawsuits between the companies that have since
come to resolutions. The companies continue to compete in the online dating app world
with Bumble’s app being second only to Match’s Tinder, with Bumble hitting a milestone of
having 100 million users this year. And now, the companies look to compete in the public
markets. Initially estimates have Bumble being valued around 6-8 billion dollars at its IPO,
whereas Match is currently valued around 40 billion.
As far as how Bumble makes money off of its app, if offers premium tiers that depending
on what tier is purchased, allows users unlimited swipes, the ability to undo swipes, the use
of "SuperSwipes" to get a person's attention, the option to extend matches and connections
after they expire, allows the user to see who likes you right away, swipe outside your
home region, turn your profile invisible, and apply unlimited filters to your matches.
While we’ll get more information about the financials once the company releases its filing
publically, it has been reported that the company made 240 million dollars in 2019.
And I’m thinking we might get that filing sooner than later as it’s rumored that the
company could go public around Valentine’s Day. Now with Valentine’s Day falling on
a Sunday this year, it won’t be right on that day, but from a publicity perspective
it makes a lot of sense to hold their IPO right around then. Once I hear more about
Bumble, I’ll let you know, I think this is another company that will have a lot of
interest from retail investors. The seventh and last company I have for you
that I know has submitted confidentially for an IPO is UiPath. UiPath’s business is built
around using artificial intelligence to build software robots that let companies automate
back-office, repetitive and time-consuming tasks. So at the end of the day, they’re
trying to help companies become more efficient by moving humans away from this menial work
and allow them to focus on things that bring more value to a company. Their robotic process
automation platform offers easy to use development tools, automation of intricate processes,
enhanced control, cloud and on-premise deployment, and multiple robots on a single virtual machine.
UiPath also provides UiPath Studio that models automation visually, UiPath Orchestrator that
manages critical enterprise duties, and UiPath Robot that executes the processes.
For some interesting background information, UiPath has been popular with private investors
as they have raised over $1 billion in funding since their founding in 2005, and in a recent
round of fund-raising, was valued at $10.2 billion. And the company claims to have annual
revenue of about $360 million and more than 6,300 customers, including Amazon, Bank of
America and Verizon. In fact, UiPath says 50% of Fortune 20 companies can be counted
as clients of theirs. With this company being in the tech industry
in general and in artificial intelligence more specifically, I have to believe this
IPO will generate a ton of interest. I’m really looking forward to a public filing
and getting a better idea of how UiPath operates and how their finances look, and once I have
it, I’ll share more details with you. Okay, so there you go, 7 companies that while
on different parts of the IPO timeline, are all firmly on the path to go public in early
2021. Which of the companies are you most interested in?... let us know in the comments.
I’m sure many of you have seen that the companies that have a lot of interest are
the ones that tend to get more videos made on them, so definitely don’t be afraid to
share your choices. As we head into 2021, we’ll have a lot more
content on IPOs, so for those of you here for the first time, I hope I convinced you
to join the community on the type of content I deliver…after all, it’s totally free
to join, you just gotta press that red subscribe button…we’d love to have you onboard.
And then for everyone, if you liked the video, please press that like button and be sure
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here for now, thank you for watching and until next time, have a great day!