There have been many interesting IPOs in 2020. Even if you generally avoid new offerings, there are a few of this year's debutantes that should be on your watchlist. Don't dismiss the rookie class just because they're new to the public markets. If anything, take advantage of the moment when question marks become exclamation points.
I feel that fuboTV (NYSE:FUBO), Palantir Technologies (NYSE:PLTR), and Lemonade (NYSE:LMND) are three companies with some serious upside here. All three went public in the past few months and have already more than doubled. Let's see why they're worthy of your attention.
The sports-first streaming-TV platform has soared 156% since going public at $10 in early October. The appeal of fuboTV is crystal clear. It operates a streaming television service -- along the lines of Sling TV or Hulu's Live TV -- but with access to most of the premium sports channels. It's also the only service streaming games in stunning 4K resolution.
The platform is exploding in popularity these days with leagues resuming play this summer. Adjusted revenue rose 71% in its latest quarter. FuboTV's paid subscriber base has risen 58% to 455,000, and the company expects to close out the year with at least 500,000 customers. Average revenue per user has risen 14% over the past year to hit $67.70 a month. The service isn't cheap, but fuboTV draws fans with its unmatched sports offerings and a decent selection of non-sports programming to appeal to other viewers.
With fuboTV boosting its subscriber guidance in back-to-back months, it's a young stock that you don't mind cheering for from the sidelines. The better play, naturally, is to get in the game as an investor.
Few things are more important for a Wall Street newbie than making sure it nails its first quarter as a public company. Palantir did exactly that. The data-mining specialist saw its revenue rise a better-than-expected 52% in last week's quarterly report. It inked a few major deals along the way, but its existing client base is more than happy to send more money Palantir's way. Average revenue per customer has risen 38% through the first nine months of 2020 compared to the first three quarters of last year.
A knock on Palantir is that it leans too heavily on government contracts. Revenue from government customers is growing faster than from its enterprise clients, and it's now up to 56% of the top-line mix. The good news is that growth is still growth. Palantir boosted its full-year revenue growth target from 42% to 44%, and it sees its top line climbing by at least 30% next year. The stock has nearly tripled since going public at $7.25 on the final trading day in September.
The next-gen insurance disruptor is another freshly minted IPO that has more than doubled since going public at $29 this summer. Lemonade is trying to shake up the property insurance market, focusing on renter, homeowner, and pet owner policies. It offers quotes in as little as two minutes with its artificial intelligence-fueled chatbot. Claims can often be resolved the same way.
Lemonade also has an altruism card in its deck. It pays a chunk of revenue left over after claims are filed to charities chosen by its customers. The model seems to be working with its largely youngish client base. Its customer count has expanded by 67% to 941,313 over the past year. The premium per customer is also 19% higher than it was a year earlier.
There's a lot to like when it comes to Lemonade, even if its valuation -- like fuboTV and Palantir -- is going to make some investors nervous. The bullish argument for Lemonade is that it will continue to expand into new categories. Even the young nature of its accounts (70% of them are 35 or younger) is a strong asset that creates a decades-long runway of future contracts for the average current customer on a cheap rental property policy.
There are lots of big winners among companies that went public in the second half of this year. Big risks come with the potential for big rewards when it comes to IPO investing.