Technology software firm Discord and digital payment provider Stripe are two businesses that investors may be able to buy on the stock market this year, according to Freedom Finance Europe.
Last year was a record for UK initial public offerings (IPOs), with 120 businesses raising £16.8bn in new money from their launches.
Company listings were boosted by the relative lack of new offerings in 2020 as businesses held back from entering the public market until the pandemic uncertainty had abated somewhat.
Globally, IPOs were up 64% in 2021 although this tailed off somewhat in the fourth quarter as Omicron added fresh concerns.
Paul Go, EY Global’s IPO leader, said: “The winds shifted with the surfacing of the Omicron variant, continuing geopolitical tensions, slowing IPO activity and increased market volatility.”
He noted it was unclear whether or not IPO-bound companies would “press pause or forge ahead” in 2022, but said that those that do would need “resilient growth strategies and well-articulated environmental, social and governance (ESG) plans”.
Maxim Manturov, head of investment research at Freedom Finance Europe, was more optimistic, noting that the upcoming year looked “particularly bright” in 2022.
However, not all IPOs are a success. Of the 120 companies that listed in the UK last year, for example, share price returns ranged from a 300% to an 85% loss.
Manturov said: “Essentially, for those looking to capitalise on the ever-growing IPO craze, research into the fundamentals of a company is critical before choosing to invest.”
First up among the most-exciting potential launches of 2022 is Stripe, the digital payment platform for internet businesses that accepts credit cards, debit cards and mobile wallets around the world.
The company, which last month announced the launch of Stripe Treasury, a financial services arm that will move the firm into the banking as a service market, was last valued at $95bn (£69.5bn).
“Given its recent performance, it is likely to have hit $100bn by the end of 2021. For those looking to invest in some of this year’s most exciting IPOs, Stripe is most definitely one to watch as it continues to strengthen its position as a key player in the online payments space,” Manturov said.
Free text, audio, and video-chatting platform Discord is another one to watch. The app, which allows people to communicate with one another through voice calls, video calls, and text messaging, as well as sending media and files through private chats, has become popular among streamers who use it to record while playing games.
“As to be expected, the gamer-oriented app became extremely popular during the height of the pandemic, with thousands of users accessing the platform to communicate with friends and family whilst in lockdown,” he said.
“In 2021, Microsoft wanted to buy the company for $10bn, but Discord management rejected the deal. An official date for the Discord IPO is yet to be announced, but it is expected early this year.”
Perhaps unknown to the UK investor, Instacart is one of the most popular grocery delivery and pick-up services in the US and Canada and could make for an interesting listing this year.
The company has market-leading logistics, including agreements with more than 400 retailers covering more than 30,000 stores, making it available to 85% of households in the US and 80% in Canada.
“It is also important to note that customers can get fresh food delivered directly to their door in less than two hours,” said Manturov.
The firm was last valued at $39bn and at IPO could be valued at $50bn, he noted, with many expecting its flotation to take place in early 2022.
Last up is Databricks, an artificial intelligence start-up that has developed software to process big data. The company includes the likes of UK building society Nationwide and US telecoms giant Comcast among its 5,000 customers.
The start-up raised $1bn in its latest funding round in early February 2021 and is currently valued at $28bn, with investors including Fidelity Management and Research, Amazon, Salesforce Ventures and Microsoft, according to Manturov.
“The company could be valued between $35bn and $50bn as its IPO launches. Investors must therefore ensure to keep the AI-driven giant on their radars,” he said.