IPO activity was sluggish at the beginning of 2024. While Q1 2024 was 12% down YoY, analysts predict optimistic outcomes for the second half of 2024. This blog post explores the trends and challenges in the IPO market and lists 10 upcoming IPOs to watch in various sectors.
2024 IPO market trends and analysis
The following trends may revive initial public offerings in 2024:
- Steady interest rates. The Federal Reserve kept interest rates unchanged at 5.3%. It may help companies raise equity through IPOs.
- Investor optimism. As much as 60% of investors, surveyed by Investopedia, feel optimistic to buy IPO stocks, followed by record stock price growth in S&P 500, Dow Jones, and Nasdaq 100.
- Economic recovery. The U.S. economy is slowly recovering from the pandemic. Unemployment rates have been the lowest for 25 months in a row, while wages have begun to grow.
- The rise of virtual data rooms for startups and investors. More businesses and institutional investors began improving regulatory and security compliance with secure data rooms.
Source: KPMG IPO Insights Q1 2024
10 notable companies going public in 2024
Tech companies
Reddit (RDDT)
Reddit, a social media company with over 500 million users, went public on March 21, 2024, at $34 per share, with a total valuation of $6.5 billion. Reddit’s business model emphasizes data licensing and AI-powered, context-based advertising algorithms.
Reddit is the first significant social media IPO since Pinterest (2019), and its performance may reflect further developments in tech IPOs. Reddit IPO stocks have increased by over 26% since listing, which may signify investor appetite for tech IPOs.
Discord
Discord, a popular instant messaging app for gamers, is rumored to go public soon. The company has over 200 million monthly active users around the world. It generated ~ $600 million in 2023, a 29.2% YoY increase. Discord has also raised over $980 million, reaching a $15 billion valuation (2021).
Today, Discord generates revenue primarily from its Nitro subscriptions. It has also launched Quests, a promising product that lets gaming companies pay Discord for integrated gaming rewards. These factors help Discord make it closer to an initial public offering on the New York Stock Exchange (NYSE).
Cerebras Systems
Cerebras Systems drives the AI revolution by developing the world’s most efficient AI processor chips. Its chips offer from 50x to 7,000x improvements in memory bandwidth, on-chip memory, chip size, and other stats. Cerebras Systems generates nearly $1 billion in annual revenue and has an estimated valuation of $4 billion after the series of venture capital funding (2021).
It recently began working with Mayo Clinic to develop AI models for medical research and treatments. The startup has already picked an investment bank and plans to go public in the second half of 2024. Bloomberg News estimates Cerebras’s valuation may surpass $4 billion at IPO.
Stripe
Stripe offers API technology for online payments. Although its 2023 valuation dropped to $50 billion from a $95 billion peak in 2021, the company enjoys significant growth, strong demand, and close attention from investors. Stripe recently raised $694 million in a private stock sale. Moreover, its transaction volumes reached $1 trillion past year, a 25% YoY increase.
In February 2024, its valuation reached $65 billion after an employee stock-sale deal, which is higher than a 2023 valuation but is still $30 billion down from its peak. Thus, experts believe Stripe may enter public markets in late 2024 or even 2025, although 2023 rumors pointed at the first half of 2024.
Financial sector
Chime
Headquartered in San Francisco, Chime develops online banking solutions, offering digital-only savings accounts, debit cards, bill payments, and other financial products. Due to digital banks becoming increasingly popular, Chime experiences rapid growth. Its annual revenue increased from $200 million in 2019 to $1.5 billion in 2024. Its valuation skyrocketed from just $1.3 billion in 2019 to $25 billion in 2021.
Chime serves over 22 million customers, more than SoFi, MoneyLion, Varo Money, and other competitors combined. As it prepares for an IPO in 2025, it has launched MyPay, a feature allowing users to withdraw up to $500 of their wage before the payday.
Klarna
Klarna is an e-commerce giant that offers cashless payment solutions to online merchants and shoppers. It serves over 37 million consumers in the United States.
Klarna has capitalized on the latest shopping trends, especially “buy now, pay later” (BNPL) services that generate $46 billion annually in phantom debt. The company states its BNLP market segment generates the most revenue in the U.S.
Klarna’s CEO, Sebastian Siemiatkowski, says the company (valued at $20 billion) plans to go public in 2025. “We are definitely ready,” said Sebastian in a TV interview for Bloomberg in May 2024.
Consumer goods and services
Skims
Kim Kardashian’s Skims produces inclusive fashion undergarments worldwide. It generated nearly $1 billion in sales and raised over $270 million in 2023. Moreover, Kim opened the Skims’ first physical shops in Los Angeles early this year.
This clothing brand has a massive audience in the U.S., and 20% of its consumers come from abroad. It’s safe to say that worldwide success makes Skims closer to listing. The company is now worth over $4 billion and plans to go public in the second half of 2024.
Shein
Shein is a worldwide fast fashion apparel brand. This giant generated $2 billion in net profit in 2023, a nearly 40% boost YoY. It also raised over $2 billion in the 2023 funding round.
Valued at $66 billion, it’s the fourth highest-valued startup in the world, according to Crunchbase, and may become the biggest IPO of 2024. However, Shein experiences regulatory and public scrutiny in the EU. European clothes manufacturers raise concerns about low-cost products saturating the market. As a result, regulatory roadblocks may derail Shein’s preparations to get listed on the London Stock Exchange.
Panera Bread
Panera Bread is a casual-dining restaurant chain that nearly 19% of all American restaurant visitors enjoy. Its sandwiches generate around $6 billion in revenue across over 2,000 units. In 2023, Penera replaced a CEO as part of its IPO preparations, planned for 2024.
Also, it optimized its management and staff teams to reduce listing-related expenses. As of now, Panera has experienced an influx of visitors and seems well-positioned for an IPO. As for a valuation, one can assume it will likely be over $7.5 billion based on Panera’s take-private acquisition in 2017.
Turo
Turo is a highly profitable car rental service with over $879 million in annual revenue, an 88% increase from 2021 to 2023. It operates in over 5,000 cities across the United States, France, the United Kingdom, Canada, and Australia.
With a valuation of around $1 billion, positive net profits, and high growth potential, Turo may go public in late 2024. It has made a confidential filing for an IPO with the Securities and Exchange Commission and may be waiting for better economic conditions to attract more investors.
3 IPO challenges and risks in 2024
Although we can see more IPOs in the first half of 2024, potential public companies still face substantial risks, including market volatility, regulatory scrutiny, and security concerns.
Market volatility
While governments stabilized interest rates, the market is still volatile, which may put many IPOs on hold. The following factors contribute to market volatility:
- The election year. Over half of the world’s population will hold national elections this year. It may bring unexpected business consequences.
- Economic uncertainty. As much as 56% of chief economists predict the global economy to decrease in 2024.
- Sector-specific risks. Extreme weather, artificial intelligence disruptions, cybersecurity concerns, and other industry-specific risks will persist throughout 2024.
Regulatory and compliance issues
IPOs around the globe feel increasing regulatory pressure aimed to boost investor confidence, which has been particularly low since 2022. Pre-IPO businesses face two main regulatory challenges:
- Increasing scrutiny. China and the U.S. set more disclosure requirements for IPOs and SPACs.
- High IPO costs. Investment banks take up to 7% of the total IPO price, while each public stock exchange listing takes $50,000–$295,000.
Security concerns
Cybersecurity attacks prevail in pre-IPO and publicly traded companies. Over 80% of companies experienced at least one data breach in 2022. Worse yet, each incident costs over $4.45 million. That is why many pre-IPO companies delay listings and improve cybersecurity infrastructures.
Also, businesses migrate IPO preparations to secure virtual data rooms for IPO to hedge against costly data breaches. Notably, the virtual data room market is evolving to counteract cybersecurity threats. Thus, leading data rooms, including Ideals, Intralinks, and Datasite, provide zero-trust security measures and bank-grade data encryption.
Key takeaways
- Steady interest rates, economic recovery, high stock market performance, and cautious optimism from investors may fuel the 2024 IPO activity.
- Tightening regulations, cybersecurity threats, and high market volatility remain the main challenges for 2024 IPOs.
- Businesses use virtual data rooms to secure IPO preparations, reduce data breach costs, and retain good reputations post-listing.