Another year is coming to a close. And while at least 159 companies went public in the U.S. in 2019, including Uber (UBER), Beyond Meat (BYND), and Peloton (PTON), 2020 is shaping up to be just as eventful.
With the U.S. presidential election coming in November, you can expect a flurry of companies hitting the public exchanges in the first half of the year. Here’s what to expect from IPOs in 2020, including public debuts from Airbnb, Postmates, SoFi, and Stripe.
A rush in the first half
Companies looking to go public in 2020 may do so in the first half of the year to avoid potential market turbulence ahead of the election, according to Equity Zen founder and CRO Phil Haslett.
“The general kryptonite for IPOs is any type of market volatility and uncertainty,” Haslett said. “As volatility goes up the number of IPOs goes down.”
It’s not just the presidential election that will drive IPOs in the first half of the year, though. According to Jackie Kelley, EY Americas IPO and financial accounting advisory services capital markets leader, fears of a general market slowdown will also play a role in various companies’ efforts to push IPOs in early 2020.
“I remember last year ... some of the IPOs got accelerated into the earlier part of the year, a lot because they were planning to go at the end of [2019], and they were still planning to go and were preparing, but they said, ‘We don’t want to get risk that we’ll enter into a recession’,” Kelley said.
“There was a little bit of, let’s get out while the market is still good, pre-recession, while the markets are still high,” she added.
Companies to watch in 2020
So what companies can you expect to hit the market in 2020?
One of the best-known contenders to go public is Airbnb. The online marketplace for rentals was originally expected to IPO in 2019, but that’s now been pushed 2020. It also looks to be gearing up for a direct listing, similar to Spotify (SPOT) and Slack (WORK).
“Airbnb has got a $31 billion private valuation,” Kathleen Smith, IPO ETF Manager at Renaissance Capital, pointed out. “They’ve selected banks, and they’re planning to move forward sometime in 2020. We think it will be the early part of 2020, I think we can say that for most.”
Founded in 2008 and funded by heavy-hitting venture capital groups including Andreessen Horowitz and Sequoia Capital, Airbnb is stacked with backers eager to reap their rewards for investing in the firm, according to TechCrunch’s Crunchbase.
Stripe, the fintech startup and rival to Jack Dorsey’s Square (SQ), could also go public in 2020. The company, which processes online payments, is valued at a mind-blowing $35 billion, thanks to late-stage investments from Andreessen Horowitz and Sequoia Capital. High-profile investors have backed the company including Elon Musk, Peter Thiel, and Google’s own CapitalG, according to Crunchbase.
Postmates is also a potential 2020 IPO candidate. The on-demand delivery services company filed confidentially to go public as far back as February, but ultimately chose to delay its IPO due to the market’s reaction to tech unicorns like Slack, Lyft (LYFT), and Uber (UBER), whose stocks got pummeled after going to market.
According to Crunchbase, the firm is valued at $2.4 billion and backed by the likes of BlackRock (BLK), Manhattan Venture Partners, Harmony Partners, and more.
SoFi also looks like it could launch its IPO in 2020. The millennial-focused financial services provider has a private valuation of north of $4 billion, and has venture funding from the Qatar Investment Authority, SoftBank, and Silver Lake Partners.
And while CEO Anthony Noto says going public isn’t a priority at the moment, Yahoo Finance editor-at-large Brian Sozzi says the company is in the perfect position for an IPO.
Not all of the companies launching their IPOs in 2020 will be tech-centric, though. Reynolds Consumer Products, the maker of Reynolds Wrap and Hefty bags, is expected to go public and could be valued as high as $7 billion.
According to Smith, the company could raise $1 billion in capital with the IPO. Reynolds filed its confidential paperwork for its public offering in November, which makes a 2020 launch all but a certainty.
There are still a number of other companies that could go public in 2020 including Elon Musk’s SpaceX and Peter Thiel’s big-date analytics firm Palantir.
There are also still questions surrounding Chinese companies going public on the U.S. exchanges, according to Haslett. While a number of China-based firms hit the U.S. exchanges in 2019, there’s a chance that a continued deterioration of the relationship between the U.S. and China could limit the number of of such firms hitting the markets.
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