UPCOMING IPOS 10 YOU CAN’T AFFORD TO MISS INVESTOR’S REPORT 10 Upcoming IPOs You Can’t Afford to Miss By Money Morning Staff Reports IPOs were red-hot in 2020. They finished the year with a revenue record of $140 billion. The last record was in 1999 with $108 billion. In case you missed out, we’ve got ten monster IPOs to look forward to in the near future: • Instacart • Stripe • Nextdoor • ThoughtSpot • Kraken • ATAI • Databricks • Chime • Impossible Foods • Sweetgreen We recently witnessed the biggest software IPO in history as Snowflake Inc. (NASDAQ:SNOW) sold 28 million shares for a total of $3.4 billion. The share price bolted out of the gate, more than 150%, from $120 to above $300. 1 INVESTOR’S REPORT Two rock star app-based companies also went public. Airbnb Inc. stock (NASDAQ:ABNB) exceeded expectations with $3.7 billion raised. DoorDash Inc. stock (NYSE:DASH) came out to the tune of $3.4 billion. There are some even more exciting IPOs to watch for in 2021. These could go public as early as Q1. How to Think About IPO Investing Today IPO investing can be tricky since you’re relying on a lot of past information to judge the future. That’s obviously not going to give you any clear answers on whether a stock is a buy or not down the road. However, you can get some idea of where the company is at in its growth ahead of an IPO for a rough estimate of its chances. If you trust the management and find out the company has grown its revenue significantly in the last few years, it might be out of the “growth phase.” Its motivation for going public would be more than a mere cash grab. Another thing to consider is always the expected valuation and price. These can either tell a true story or be immensely overblown – often the latter – by hype. As a result, you often see a drop after the IPO. You could also have the opposite problem. The stock could open near or below expectations, which could spark negative sentiment. That’s why it never hurts to give the stock some breathing room before rushing in. To learn more about IPO investing, check out our comprehensive IPO investing guide. Now, let’s get into these upcoming IPOs. 2 INVESTOR’S REPORT Instacart IPO Seizes on Digital Shopping Trends An Instacart IPO is most likely underway in late 2021. It’s a grocery shopping and delivery app. The company had massive success as delivery became the primary mode of grocery shopping during the pandemic lockdowns. Thanks to the boost, this could be one of the biggest IPOs in 2021. It will go toe to toe with DoorDash, since it recently also expanded to grocery delivery. It’s important to remember, however, that many conditions surrounding its IPO likely won’t be the same. There are three things that separate Instacart from DoorDash, and it will be interesting to see how it all pans out. For one, Instacart was founded by a former Amazon.com Inc. (NASDAQ:AMZN) employee, likely with some insight into the Prime delivery business. This could be a logistical leg up for Instacart in that battle. Another leg up would be that Instacart was founded a year ahead of DoorDash. This might seem like a marginal difference, but don’t underestimate the benefit of being a first mover. The amount of ground you can cover in a year is significant. Where it is truly a first-mover is in the “shopping” aspect of its business. While DoorDash only added groceries to its list this year, Instacart was the pioneer. It has several of the familiar problems faced by gig stocks like DoorDash, Uber Inc. (NASDAQ:UBER), and Lyft Inc. (NASDAQ:LYFT). Yet the company had an impressive 2020 and now could outperform its direct and indirect competition after a successful IPO. 3 INVESTOR’S REPORT Should You Buy Instacart Stock? Instacart was valued at $3.4 billion in 2017. Since then, the company has rocketed to a $17.7 billion valuation. Its demand grew 274% year over year due to the pandemic. Since a successful vaccine will take time to distribute, we could still be looking at similar growth in the near future. Its latest numbers put the company close behind retail giant Walmart in online deliveries. Instacart worked all of 2020 to streamline its order process with an “order ahead” feature and similar options to bolster its sales volume. In addition, the company is partnered with over 500 retailers, including Walmart. This could give the company increased exposure to the market. Unfortunately, it still suffers all the pressures you would expect from a California gig stock. The state passed a January 2020 law capping the number of contractors a corporation can hire. Even if this weren’t the case, Instacart shoppers, similar to Uber and Lyft drivers, have put pressure on the company to treat them more like employees, which would raise expenses for Instacart. The story with DoorDash was that you should have considered whether the company was an Uber or a Lyft. Since their 2019 IPOs, Uber is up 20%, and Lyft is down 37%. Similarly, the DoorDash versus Instacart battle will be one of marketing and price competition, which could either drive both stocks down for a while or prove who’s boss real quick. It doesn’t help that Grubhub and Uber Eats exist as well. You could look at the DoorDash IPO to get an idea of how the stock might perform early on. 4 INVESTOR’S REPORT The good news is that Instacart will have the cash to expand – the over 400% cash infusion since 2017 helps that effort. Stripe IPO Comes Just in Time for the E-Commerce Boom Digital payments are another trend that exploded in the pandemic, and we likely haven’t seen the last of it. Everyone and their mother wants to have their own e-commerce store. E-commerce makes up around a $3 trillion market, with online shopping taking a bigger share of retail sales every year. Stripe is a company that enables those e-commerce hopefuls to get paid for their goods and services digitally and with ease. Right now, the company is worth $36 billion. It’s the most valuable American fintech company yet to go public. With a growing number of businesses going online, either to stay relevant or to save on brick-and-mortar capital, this is sure to increase. It’s not merely e-commerce driving this growth. Use cases for digital pay have increased with the pandemic. People are paying for doctor’s appointments through telemedicine, consulting lawyers and therapists via Zoom Video Communications Inc. (NYSE:ZM), and much more. Seeing this opportunity, Stripe plans to pour more money into optimizing the platform, and an IPO in 2021 will help it do that. In addition to e-commerce, Stripe has a rich SaaS clientele, with Salesforce.com Inc. (NYSE:CRM) at the top of the list. SaaS is another huge potential market set to boom over the next decade, and that’s potential profit for Stripe. EXTRA: The five BEST stocks to buy in 2021 and dozens of popular stocks to avoid at all costs. Watch now. 5 INVESTOR’S REPORT Should You Buy Stripe Stock? If you haven’t noticed the trend here, competition is thick for digital stocks. Stripe has PayPal Holdings Inc. (NASDQ:PYPL), Square Inc. (NYSE:SQ), Venmo, and CashApp to contend with. These apps all serve different use cases, but as this market gets sorted out, it could get bitter. How does Stripe stack up financially? Right now, the company has $2 billion cash on its balance sheet, meaning it’s valued at 18 times its cash. Square’s valuation is 15 times, with $3.43 billion cash on hand. PayPal’s valuation is 20 times cash. Square’s latest revenue report came in at $7.56 billion for the quarter, up $2 billion from previous reports. PayPal’s most recent quarterly revenue was around $5.46 billion. Stripe’s is unknown, but you can get some idea of where it will be based on these numbers. Analysts expect its revenue to be in the ballpark of $3 billion and $4 billion. With so many similar, exciting competitors, the same wisdom applies to Stripe as these other flashy tech stocks. Give it some time. Watch Out for the Nextdoor IPO Nextdoor was valued at just $2 billion in its last funding round, back in September 2019. It could more than double by its IPO. The neighborhood networking app could be valued somewhere between $4 billion and $5 billion by its IPO. According to Bloomberg, the company has had a few chances to go public via SPAC merger, but it turned all of those down. 6 INVESTOR’S REPORT This 2008 San Francisco startup provides a sort of “neighborhood watch” experience but with the addition of fostering community by listing events and services nearby and facilitating conversation between neighbors. The app is currently available in 11 countries. In the time of COVID-19, it proved a hit as people were forced to travel less and look for ways to engage with their more immediate surroundings. It could remain an important app in the future if people gravitate to a more localized lifestyle. Is Nextdoor Stock a Buy? Its growing valuation is paralleled by a growing number of U.S. neighborhoods using Nextdoor. Right now, it serves over 220,000 neighborhoods.