IPOs to watch in 2021: The 5 most anticipated debuts

Despite the almost constant upheaval caused by the coronavirus pandemic, 2020 will be considered one of the top performing years for initial public offerings (IPOs). An impressive 216 companies have gone public in the past 12 months, most since 2014, raising a staggering $ 78.1 billion.
Consistent with previous years, healthcare and technology were the most popular sectors of the IPO market. Airbnb (ABNB), Doordash (DASH), Snowflake (SNOW), Lufax Holding (LU) and Royalty Pharma (RPRX) were the biggest companies to go public this year.
And 2021 looks like it might as well be for public debuts, according to Kathleen Smith, IPO ETF manager at Renaissance Capital.
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"As long as the market holds up, we could most likely see a better year in 2021 than in 2020," Smith told Yahoo Finance. While the IPO market got off to a strong start in 2020, the pipeline was essentially closed in March due to the pandemic before picking up speed again in the second half of the year. The momentum for the new year looks promising, provided that the Federal Reserve's monetary policy remains in place for the foreseeable future.
BURLINGAME, CALIFORNIA - AUGUST 10: David Baszucki, Founder and CEO of Roblox, presenting at the Roblox Developer Conference on August 10, 2019 in Burlingame, California. (Photo by Ian Tuttle / Getty Images for Roblox)
Overall, this year's list of public offers has developed extremely well during and after its IPOs. The Renaissance IPO ETF (IPO) is up 119% this year compared to the 14.3% overall gain at S&P, making it the best year ever. The average return on a U.S. IPO this year was 75.4%, compared to 24.4% last year and a -1.9% loss in 2018.
With two COVID-19 vaccines now approved in the US, one possible shift is what is known as a return to normal that may not favor growth-oriented health and technology companies and instead benefit from cyclical names that are not so lofty. "We can't be so sure that tech IPOs will be high on the list for 2021." The moment there is any concern, the markets are corrected and the prices for deals are more conservative and they are not getting done, ”said Smith.
The well-known companies of 2021 range from communication services to non-basic consumer goods to fintech and materials. Juggernauts like the gaming platform Roblox, the retailer Affirm, who buys now and pays later, and the chemical and equipment company Atotech are ready to raise up to $ 1 billion each. And there are many other companies waiting in the starting blocks.
Roblox (RBLX)
If you have kids, you know Roblox. The $ 4 billion online gaming platform allows users to create and publish their own video games using the Roblox toolset. It's partial creation, partial game and is expected to hit the public market next year. Founded in 2004 by David Baszucki and Erik Cassel, the company makes money selling its Robux game currency.
Roblox 'S-1 shows that the company, along with the rest of the gaming industry, has seen rapid growth in users and revenue, but its losses have grown in lockstep.
BURLINGAME, CALIFORNIA - AUGUST 10: David Baszucki, Founder and CEO of Roblox, presenting at the Roblox Developer Conference on August 10, 2019 in Burlingame, California. (Photo by Ian Tuttle / Getty Images for Roblox)
For the nine month period ended September, Roblox had 31.1 million daily active users, an 82% increase over the same period last year. Revenue was $ 589 million, but net losses were $ 203 million, four and a half times the $ 46 million lost in the same period of 2019.
Roblox, whose debut was widely expected in December, delayed its entry into the public markets after Doordash and Airbnb made it difficult for the video game company to value its stocks, according to the Wall Street Journal.
Smith says the company should see a lot of interest from investors.
"I look at Roblox and even though they are losing money, they have positive cash flow and it is over $ 1 billion in an IPO. I think investors will look out for it," said Smith.
Affirm Holdings (AFRM)
Affirm Holdings, like Roblox, should go public in December 2020. However, it delayed the move until at least January 2021 after Doordash and Airbnb saw massive pops during their public offerings.
The company, which could be valued at $ 10 billion, is part of a growing number of buy-now, pay-later services that provide 0% interest or simple interest loans to consumers looking to buy everything from shoes to exercise bikes to offer.
NEW YORK, NEW YORK - JUNE 11: Max Levchin, Co-Founder and CEO of PayPal, attends "Countdown To The Closing Bell" at Fox Business Network Studios on June 11, 2019 in New York City. (Photo by John Lamparski / Getty Images)
Founded in 2012, the company is still losing money and reported net losses of $ 120.5 million and $ 112.6 million in 2019 and 2020, respectively, according to S-1. Still, Affirm, which was founded by PayPal co-founder Max Levchin, is going , likely to raise billions of dollars through its IPO.
"The company is losing money and I think, although it's growing very fast, these types of companies are like payday lenders," said Smith. "You have a few things that investors need to look out for when it comes to rules and regulations."
Atotech (ATC)
Originally expected to go public in the first half of 2020, Atotech, a Carlyle Group company, delayed its debut due to the coronavirus pandemic, fearing it would hurt its valuation. The company makes specialty chemicals and devices that range from smartphones to communications infrastructure.
The German company filed its F-1 with the Securities and Exchange Commission in January 2020 and reported a consolidated net loss of $ 23.7 million on revenue of $ 1.2 billion in 2018. However, for the nine months ending September 2019, the company posted net profits of $ 12 million on revenue of $ 877 million, and its IPO deal could reach $ 1 billion.
Of course, the company also has to grapple with variables in the broader technology industry, including the whims of consumers and businesses buying cycles for electronic infrastructure.
Petco (WOOF)
This is where pets go and investors will go in 2021 too. Pet trading giant Petco is slated to go public in 2021 with a deal worth up to $ 800 million. Founded in 1965, the company was last listed on the stock exchange in 2006 and has been owned by private equity investors ever since.
Going further in the company's S-1, CEO Ron Coughlin says, “Petco has grown from a local veterinary business to a disruptive, fully integrated, digitally-led, comprehensive pet care ecosystem that focuses on the health and wellbeing of pets come first. ”
Shoppers wait in line outside a Petco pet store in Hollywood, California on April 23, 2020 during the novel coronavirus pandemic. (Photo by Robyn Beck / AFP) (Photo by ROBYN BECK / AFP via Getty Images)
That's a fancy way of saying that you can get practically everything you need for your pets from the retailer. After the outstanding performance of online pet retailer Chewy (CHWY) since going public in June 2019 - up 107% - Petco expects the demand for pet products will only continue to grow.
The company, happily listed as a WOOF, has seen an improvement in profitability recently. Net losses in 2018 were $ 413 million, but decreased to $ 103 million in 2019. Net sales increased from $ 4.39 billion in 2018 to $ 4.43 billion in 2019 over the same period.
Southeastern Grocers (SEGR)
Southeastern Grocers, which operates 420 supermarkets under the names of Winn-Dixie, Harveys, and Fresco y Más, is an interesting addition to this list as it only emerged from bankruptcy in May 2018. In its S-1, the company reports its overall financial position, performance was hurt by aggressive expansion from 2011 to 2015, which saw the branch base grow 256%.
Since then, profitability has improved as the company reported a net loss of $ 62 million in the 28 weeks ending July 10, 2018, which resulted in a net income of $ 205 million in the 28 weeks ending July 8, 2020 .
Southeastern Grocers, a leaner organization, is targeting an IPO in 2021 and could raise up to $ 500 million.
The future pipeline
While many of these companies are trying to achieve public exchange the traditional way, 2020 was a banner year for alternative avenues to IPO - namely the SPAC (Special Purpose Acquisition Company). Two hundred and forty-one SPACs raised $ 73.4 billion. While household names are likely to go for a traditional IPO or even a direct listing, those looking for a faster liquidity option will consider these so-called blank check companies to take them public.
Investors should expect alternative means of going public in 2021 will continue to be a priority. “Private companies such as Paysafe and Opendoor took advantage of the speed and price security that the SPAC structure offers in an uncertain market. Companies now have more options than ever when seeking public listing with SPACs and direct listings, both of which are turning out to be “mainstream” options, ”said EquityZen, pre-IPO marketplace.
Aside from the five above, which are almost certain to go public in 2021, there are a number of other highly anticipated debuts from companies that have become household names. The payment platform Stripe, the startup Instacart for the delivery of groceries, the stock trading app Robinhood Markets, Compass for residential real estate, the dating app Bumble, the online education platform Coursera and the fashion players ThredUp and Poshmark are preparing their market debuts.
See also:
Doordash's IPO is “the most ridiculous IPO of 2020”.
Airbnb could be "the most successful IPO in recent years"
What Airbnb learned from the pandemic saved its IPO
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Dan Howley is the New York-based tech writer. Melody Hahm is the West Coast correspondent based in Los Angeles.
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