10 IPOs Investors Should Look Out for This Year

The last year or so has seen a nearly unprecedented surge in initial public offerings (IPOs). Blockbuster companies like Airbnb, DoorDash, Roblox, Coinbase, and Rivian have all gone public amid a surge in tech stocks during the pandemic recovery.

While the stock market sell-off to start 2022 may cool off interest in going public, there are still a number of high-profile companies that could make their debuts this year. Keep reading to see 10 of the biggest names on the list.

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For years, investment bankers have been eagerly awaiting Stripe's public offering.

The payments company, whose software powers thousands of businesses like Amazon, Shopify, and Under Armour, reached a valuation of $95 billion in its last funding round last March, making it the most valuable privately held start-up in the country.

While Stripe has remained private longer than most software-as-a-service (SaaS) companies, there are signs that it could go public this year. Bloomberg reported last September that the company was in early talks to go public, either through a traditional IPO or a direct listing. In November, co-founder John Collison tamped down hopes for an IPO, saying the company was happy staying private, but a recovery in fintech stocks could encourage the company to go public.

After all, some investors think Stripe could be worth more than PayPal, which is currently valued at $134 billion.

ALSO READ: Top Fintech Stocks to Buy in 2022

Not every IPO is for a stock going public for the first time, and the anticipation for Mobileye's debut offers one example of how reissues can attract a lot of attention.

The driverless-technology company was acquired by Intel in a $15.3 billion deal in 2017. Intel said in December that it plans to spin off the subsidiary to create shareholder value.

Intel would retain majority ownership of Mobileye and has no intention to divest its stake. Reuters reported that, according to one estimate, Mobileye could fetch a valuation above $50 billion.

There's no word yet on timing of an offering, but a $50 billion-plus debut would certainly make a splash on the market and represent a large return for the chipmaker.

2021 was a banner year for Reddit as its WallStreetBets subreddit made headlines after its users successfully engineered a massive short squeeze on GameStop and a number of other stocks.

The social media company has also benefited from increased screen time during the pandemic as users have dived into topics like cryptocurrency on the site's various forums.

Now, Reddit is aiming to go public this year as it's already confidentially filed to go public with the Securities and Exchange Commission. It's also reportedly hired Goldman Sachs and Morgan Stanley to assist with the offering. Reddit last raised funding at a valuation of $10 billion in August, and it's seeking a valuation as high as $15 billion when it debuts.

ALSO READ: Top Social Media Stocks in 2022

One of the biggest winners of pandemic trends was Instacart, the grocery delivery specialist and competitor to companies like DoorDash.

The company's valuation doubled in its last funding round a year ago to $39 billion.

Instacart said in November that it was delaying plans to go public to work on broadening its services beyond delivery for grocery retailers, but that doesn't make an IPO for Instacart by the end of the year out of the question, especially if the company's growth reaccelerates in 2022. Last year, according to website The Information, revenue grew by roughly 10% after more than tripling during the pandemic boom. Additionally, a rewarding IPO market could encourage Instacart to go public at a time when it would score a rich valuation.

Following the successful debut of Beyond Meat in 2019, anticipation for more plant-based meat companies has grown, and Impossible Foods may be the biggest prize in the industry.

The maker of the Impossible Burger has raised more than $2 billion since it was founded in 2011 and has partnered with fast-food chains such as Burger King to make the Impossible Whopper.

The timing of an IPO isn't clear, but CEO Pat Brown has said that going public is "inevitable." Though Beyond Meat stock has flailed in recent months, investor interest in the vegan sector still seems strong, and Impossible Foods is now more than a decade old. 2022 could be the year it goes public.

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E-commerce businesses surged during the pandemic, and even though the beauty industry has struggled during most of the past two years, online beauty start-up Glossier is still in a strong position to go public.

A number of similar e-commerce companies -- including Rent the Runway, Poshmark, and Allbirds -- have had successful IPOs recently, and Glossier seems to have reached a level of mainstream awareness to drive its own public offering. Additionally, the recovery of social events, travel, and other such occasions this year that were off-limits for much of the pandemic could drive spending on beauty products, making an IPO like Glossier attractive.

The company was valued at $2.5 billion in its last funding round and is growing fast.

ALSO READ: Top Cosmetic Stocks

Like Reddit, another app that saw strong growth during the pandemic was Discord, a messaging app used for instant messaging and voice and video calls. Discord is a popular tool among video gamers and for discussions about things like non-fungible tokens (NFTs).

The app's monthly active user base jumped from 56 million in 2019 to 140 million in 2020, and it received buyout interest from Microsoft, which reportedly offered $10 billion, though a deal never materialized.

Discord was valued at $15 billion in its most recent funding round in September.

Alteryx and Snowflake competitor Databricks could be one of the biggest IPOs of the year.

The maker of data analytics software scored a $38 billion valuation in its last funding round in August, and CEO Ali Ghodsi has reportedly said the company is "going public six months at a time," a hint at an upcoming IPO.

With the successful IPO of Snowflake, which trades at one of the highest price-to-sales valuations on the market, it wouldn't be surprising to see Databricks follow suit. Though SaaS valuations have come down in recent months, Databricks would likely fetch a nice price if it went public.

ALSO READ: Where Will Snowflake Be in 1 Year?

Buy now, pay later has taken the investing world by storm, and Klarna could be the latest company to cash in. Following the successful debut of Affirm Holdings, and Block's near-$30 billion acquisition of Afterpay, an IPO for Sweden-based Klarna seems likely.

The company received a healthy valuation of $45.5 billion in its last funding round in June, which was led by SoftBank's famed Vision Fund.

Klarna now has 90 million active customers and more than 250,000 merchant partners, and it operates in 17 countries.

CEO Sebastian Siemiatkowski said in 2021 that an IPO was likely within the next year or two, and that the company planned to list in the U.S.

With the housing market booming over the past two years, demand for all kinds of home-improvement projects has spiked along with it.

A competitor to Angi, Houzz actually laid off 10% of its staff early in the pandemic in April 2020, but since then the business has taken off, and an IPO seems imminent.

The company was valued at $4 billion in its last funding round in 2017, and Reuters reported that the company is planning to go public early this year, hiring Goldman Sachs to assist with the offering.

If the housing market remains strong, Houzz could fetch a valuation significantly higher than $4 billion in an IPO.

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Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

While it's exciting to follow upcoming IPOs and these stocks often surge on opening day, it's worth remembering that IPOs often underperform over the long term.

In fact, many of the highest-profile IPOs of the past few years are now trading below their debut price, including Uber, Lyft, Coinbase, and Rivian, and a large number of special purpose acquisition companies have gone bust as well.

In other words, it's often best to wait to buy hot IPOs, as a better price usually becomes available after the IPO pop.

Of course, that depends on the valuation, market sentiment, strength of the business, and other factors, but it's worth taking a cautious approach to new issues, especially in a frothy market like the one we've had over the past two years.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns ANGI Homeservices Inc., Airbnb, Inc., Alteryx, Amazon, and Block, Inc. The Motley Fool owns and recommends Affirm Holdings, Inc., Airbnb, Inc., Alteryx, Amazon, Beyond Meat, Inc., Block, Inc., Coinbase Global, Inc., DoorDash, Inc., Goldman Sachs, Intel, Microsoft, PayPal Holdings, Poshmark, Inc., Roblox Corporation, Shopify, Snowflake Inc., SoftBank Group Corp., and Under Armour (C Shares). The Motley Fool recommends Softbank Group, Uber Technologies, and Under Armour (A Shares) and recommends the following options: long January 2023 $1,140 calls on Shopify, long January 2023 $57.50 calls on Intel, short January 2023 $1,160 calls on Shopify, and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.