7 Recent and Upcoming IPOs to Watch in 2024 | Investing

Optimism is rising over the U.S. initial public offering market after a couple of years of significant decline.

There were 128 U.S. initial public offerings in 2023, with a cash value of $22.6 billion, according to Ernst & Young. Although it was a slow year for IPOs compared with 2021, it was a step up from 2022, which saw only 90 IPOs with $8.6 billion in total IPO proceeds. Also, several high-profile deals late in 2023 showed that investors are willing to get behind the right companies, Ernst & Young reports.

Signs of economic life are sprouting as market mavens wonder if the Federal Reserve will pivot and start cutting interest rates after 11 consecutive rate hikes from March 2022 to July 2023.

“The biggest factors facing the IPO market right now are interest rates and the success of the slew of IPOs planned for the first quarter of 2024,” says Gregory Sichenzia, founding partner at Sichenzia Ross Ference Carmel, a New York City-based securities law firm. “While it’s taken the Fed longer to start slashing interest rates (than) expected, the general consensus is still that the economy is very good and that interest rates will fall sooner rather than later.”

While the IPO market percolates early in 2024, let’s take a look at the top recent IPOs as well as the upcoming IPOs that are generating the most buzz this year:

*Estimates for Reddit, Shein, Panera Brands and Skims; others are initial valuations on a fully diluted basis at the time of the IPO.
**Based on 2017 acquisition price.

IPO valuation: $5 billion

The Reddit IPO had been stuck in a holding pattern, but on Feb. 22, the digital-message-board company filed paperwork to finally sell shares to investors. The company noted a 20% revenue gain for 2023 in the filing, and it is seeking at least a $5 billion IPO valuation. That figure is much lower than the $10 billion at which Reddit was valued in a funding round in 2021.

Reddit CEO Steve Huffman, citing the “deep ownership of communities” on the social media platform, has indicated that 75,000 IPO shares will be set aside for Reddit’s most active users.

“Reddit is expected to IPO sometime next month and will be highly sought after for a few reasons,” says Deiya Pernas, chartered financial analyst and co-founder of Pernas Research in San Juan, Puerto Rico. “It has been long anticipated and is recognized as a large social media platform with multiple avenues for continued growth.”

Another reason is that this will be the first social media IPO since Pinterest Inc. (PINS) made its public debut in 2019. Still another is its stats: 100,000 active communities, 73.1 million average daily active users and a current estimated addressable advertising market of $1 trillion.

Reddit plans to trade on the New York Stock Exchange under the ticker RDDT.

IPO valuation: $45 billion

In early December, word leaked that Chinese digital fashion brand Shein had filed confidential paperwork with the U.S. Securities and Exchange Commission to go public, presumably in early 2024. That scenario hit a snag as the SEC reportedly is holding up the Shein IPO over its operations in China, according to Bloomberg. The situation is so dire that Shein is reportedly considering moving its IPO to London or Singapore.

Florida Sen. Marco Rubio has lobbied the SEC to halt the U.S. IPO in New York until the retailer comes clean with business operations disclosures, with forced labor being a big issue. Shein must address “the serious risks of doing business” in China, Rubio stated in a Feb. 15 letter to SEC Chair Gary Gensler, as reported by Reuters.

“Shein’s IPO was heavily anticipated, and the SEC news is likely to cause a stir,” Pernas says. There’s no word on when or even if the SEC will change course and greenlight Shein’s U.S. IPO.

IPO valuation: $7.5 billion

Another U.S. IPO that remains in limbo is Panera Brands, owner of iconic food brands like Panera Bread, Caribou Coffee and Einstein Bros. Bagels. The company filed for an IPO in late 2023, but company officials remain mum on the IPO date.

JAB Holding Co. – former owner of Au Bon Pain and current owner of Krispy Kreme Inc. (DNUT) – purchased Panera Brands for $7.5 billion, and it has been held as a private company since 2017.

“Panera’s public offering will not only reflect its market positioning but also serve as an indicator of investor sentiment toward the food and beverage sector,” says Seth Farbman, chairman and co-founder of Vstock Transfer, an SEC-registered stock transfer agency.

IPO valuation: $4 billion

Skims co-founder Kim Kardashian has had a major influence on how the inclusive and body-positive direct-to-consumer apparel brand operates.

A case in point: Skims is a rare example of a young retail brand making physical stores a priority. The company is planning a 5,000-square-foot flagship store in Los Angeles and is prepping more U.S. stores in New York and other large cities that attract shoppers from all over the world – virtually all of whom recognize the Kardashian brand.

The company’s valuation stands at $4 billion with an as-yet-unannounced 2024 IPO date. Launched in 2019, Skims is making its IPO case with some big sales numbers, including an estimated $750 million in 2023 revenues, up from $500 million the year before.

Two conditions are prevalent in the IPO scene now: “First, general market sentiment usually needs to be favorable to create an environment where companies will want to go public,” Pernas says. “Additionally, IPOs are influenced by sectors that are hot.”

Having the Kardashian name on board will help on both fronts. It’s as close to “hot” as a fashion brand IPO can get.

Birkenstock Holding PLC (BIRK)

IPO valuation: $8.6 billion

Birkenstock shares are trading at $51.45 per share as of Feb. 27 – that’s up about 24% over the past three months, following a rough start immediately after BIRK debuted on Oct. 11, 2023, at $41 per share.

Wall Street analysts are marginally bullish on the stock. Robert. W. Baird analyst Mark Altschwager just maintained a “buy” call on BIRK with a $54 price target. Telsey Advisory Group is also in on the stock, reiterating its “buy” position with a $56 target price.

Birkenstock’s financials are looking better, and annual earnings per share may clock in at $1.42 for 2024, according to analysts at William Blair, which is above the consensus estimate of $1.29. The consensus EPS forecast for 2025, however, is $1.71.

Birkenstock is getting more aggressive about selling its consumer products in Asia, where top-line sales currently make up just 10% of the European retailer’s revenues.

Maplebear Inc. (Instacart) (CART)

IPO valuation: $9.9 billion

Instacart, officially known as Maplebear Inc., finds itself in “reset” mode five months after its IPO rolled out. On Feb. 13, the online grocery-delivery company announced it was laying off 7% of its staff and saw its chief technology officer and chief operating officer leave the company.

CART’s share price certainly hasn’t suffered. The stock is up 34.5% year to date, a remarkable pivot from its slide from Sept. 19 to Dec. 5, 2023. Its $31.56 share price as of Feb. 27 hovers just above its $30 IPO price.

Revenues are up, too. During the fourth quarter of 2023, company sales rose by 6% to $803 million. Instacart’s average order value of $113 in Q4 was also a slight increase from the year before.

Analysts have taken note of CART’s turnaround, with advisory firm Stifel Nicolaus issuing a “buy” rating with a $44 share-price target. Instacart hasn’t commented on rumors of an Uber Technologies Inc. (UBER) buyout, but ownership is talking about its new technology strategy, which includes an AI-powered “super cart” for its digital grocery consumer base.

IPO valuation: $54.5 billion

British chip designer Arm is a clear winner in any recent IPO matchup, returning 83.6% on a year-to-date basis as of Feb. 27 and up 126.1% over the past three months.

The company, 90% of which is owned by Softbank Group Corp. (OTC: SFTBY), is riding Nvidia Corp.’s (NVDA) high-performing coattails (Nvidia currently licenses Arm’s chip design). That partnership has helped boost Arm’s stock, especially after Nvidia posted monster results and guidance for the fourth quarter of 2023, with revenues up 265% from Q4 2022.

In its most recent quarter, Arm also beat consensus analyst estimates. Hans Mosesmann, an analyst with Rosenblatt Securities, recently held his “buy” rating on the stock and raised his price target to $180 per share from $140. Mosesmann cited Arm’s AI-fueled royalty growth along with a robust product-licensing strategy as big reasons for its success.

Nobody’s saying Arm is the next Nvidia. As such, investors should take heed, weigh the stock’s sky-high valuation and lack of profit growth to date, and invest accordingly – preferably with the help of a trusted financial advisor.