An initial public offering (IPO) is an exciting event. A business becomes a freshly minted, public company trading on a stock exchange, raising its profile that much higher and becoming the subject of much break room talk and internet speculation.
2021 was a good year for the IPO (plus its Johnny-come-lately cousin, the SPAC merger), and so far 2022 looks set to at least equal its predecessor. Here's a brief look at three notable companies set to top the class of 2022 IPOs -- Flipkart, Mobileye, and VinFast.
It isn't every day that one of the dominant e-commerce companies in a nation packed with more than 1.3 billion people goes on the market. But that's what looks to be happening this year with Flipkart, one of the two sector giants in the giant nation (No. 1 is Amazon India).
Flipkart is majority-owned by Walmart, which for some time now has been talking up either an IPO or SPAC merger for its big Indian subsidiary. The American retailer now seems to be slanting toward a traditional IPO, possibly because this traditional method of going public is seen as more transparent for investors.
From the company's latest talk, a 2022 IPO seems to be the best bet. If that happens, Flipkart should hit a valuation of around $50 billion.
While that's modest compared to its majority owner's market cap of $376 billion (or, while we're at it, Amazon's $1.4 trillion), it tops that of other notable retail sector mainstays such as Kroger, Walgreens Boots Alliance, and Dollar General. That means if Walmart's dream of spinning off Flipkart as a separate company is realized, it'll be a big-time retail stock right from the start.
Speaking of potentially well-capitalized spinoffs, we've got tech giant Intel's (INTC 0.12%) assisted/autonomous driving unit Mobileye. Less than five years after purchasing the formerly stand-alone company in a $15.3 billion deal, Intel aims to return it to that status with an IPO that could (like Flipkart) reap as much as $50 billion, according to recent estimates.
In certain ways, Intel and Mobileye seem to be a good fit for each other.
The latter concentrates on providing "sight" for assisted and autonomous driving systems (hence the name) with advanced computer processors. Mirroring its parent's impressive client list, Mobileye's chips have been installed in the systems of some of the world's top auto brands, including Nissan, BMW, and Chinese electric vehicle (EV) up-and-comer Nio.
But unlike Intel, which has struggled with its classic PC chip business, Mobileye continues to grow at an admirable clip. In 2021 its revenue rose a steep 43% year-over-year -- by far the best rate of its parent's six business units and sub-units.
That still-scorching growth, plus Mobileye's position as a top vision processor specialist inside the next-generation automobile sector, virtually guarantees that it will attract gobs of interest from investors if it hits the stock market this year.
Interest should also be keen in another company involved with EVs, VinFast. This Vietnam-based carmaker, a division of that country's largest conglomerate Vingroup JSC, looks to be coming to the market through either a SPAC merger or an IPO in the second half of this year.
Not at all coincidentally, that's around the time VinFast aims to launch its first models on the Vietnamese, North American, and selected European markets. A reservation system for the vehicles, two SUVs the company slots into the category of "affordable luxury", has already been set up on the company's website.
True to its name, VinFast likes to move speedily. It launched in 2017, began selling traditional gasoline-powered autos in 2019, and has lately been talking about a full transition to EV production at the end of this year.
The company also plans to establish manufacturing capacity in the U.S., all the better to start supplying product to a massive, car-loving market that has enthusiastically embraced EV technology.
As for its market debut, the company is probably pushing on the gas for that too. The sooner the better, as the current craze for EV stocks might not last with more players on the market. Either way, VinFast might be able to raise around $3 billion in coming to the exchange, according to a recent report from Bloomberg citing "people familiar with the matter."
A word of caution
Everyone likes shiny new things, and that's particularly true of stock investors. IPOs tend to be accompanied by a lot of hype from issuers and their underwriters, not to mention the many Reddit-loving investors eager to post about new stocks.
We should also bear in mind that fresh stock exchange arrivals tend to be wobbly and volatile in price at first. This is because investors finding the value of a company that usually hasn't existed before as a stock.
That's why it's important to ignore the noise around IPOs. Many smart investors advise waiting some time (six months seems to be a good term) to see how a new stock performs. This also provides us a chance to get a better sense of a company's business trajectory with its latest quarterly earnings report(s).
That said, all three of these companies are definitely worth a look for anyone interested in upcoming stock market arrivals. Watch this space for more on each as their listing plans firm up.