To say the market for initial public offerings (IPOs) is in a funk would be a major understatement. In 2022, the worldwide IPO market went from record-breaking levels during the Covid-19 pandemic into a full-on depression, according to an analysis by EY. In 2022, there were 1,333 IPOs held, down 45% from 2021.
Proceeds from those 2022 IPOs totaled $179.5 billion, down 61% from the previous year. No wonder investment bankers at firms such as Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) continue to lament a dearth of deals. While 2023 hasn’t seen much of an improvement on the IPO front so far, there is hope that several high-profile and lucrative new stocks will come to market before year’s end. Some might even happen in the next few months.
Here are the three biggest IPOs to watch for in Q2 2023.
British microchip designer Arm may have had its planned takeover by Nvidia (NASDAQ:NVDA) scuttled by global regulators, but that debacle has only pushed the company to proceed with its own IPO this year. Arm recently made waves by announcing that it plans to hold its IPO, which has been estimated at about $50 billion, on the New York Stock Exchange rather than in the United Kingdom where the company is based.
Arm, which SoftBank (OTCMKTS:SFTBY) currently owns, said that it plans to only pursue a stock listing in the U.S. and has no plans to also list shares on a European exchange. This was front-page news in the U.K., where the British stock market is losing out on IPOs after the nation’s exit from the European Union. With 3,000 staff in the U.K., Arm is one of England’s premier technology companies. About 95% of smartphones today contain Arm processors.
London has relaxed its listings rules to try and attract leading companies to its stock market. But no joy from Arm. The exact date for Arm’s IPO has not been set. But the March announcement that the company plans to list shares in New York has led to speculation that the IPO could happen by the end of the current second quarter.
Another big IPO this year will likely be Irish e-commerce company Stripe. With 2022 revenue of $14.4 billion, Stripe has been called the most valuable privately held technology startup in the world. Its IPO is expected to raise around $50 billion and could be one of the hottest market debuts in recent years. Company co-founders and brothers Patrick and John Collison have been talking about taking their company public since before the pandemic in 2020. Could it happen in Q2 of this year? Nothing is official, but the rumor mill continues to churn.
Conditions for an IPO haven’t been quite right over the past 18 months as stocks entered a bear market. Stripe lowered its valuation to $50 billion in its most recent funding round from $95 billion in 2021. However, despite the valuation downgrade, many investors are clamoring to get in on Stripe’s IPO. The company develops software for payment processing on e-commerce websites and mobile apps, and, by most accounts, its business is booming.
The r/WallStreetBets crowd is all over this upcoming IPO. Social media company Reddit is widely expected to go public this year in an IPO that could be worth as much as $10 billion. The exact timing of the IPO has not been made public, but like Stripe, Reddit has been angling to tap equity markets for years. It also had to put its plans on hold due to the pandemic.
Of course, Reddit is best known these days for the r/WallStreetBets subreddit, where retail traders talk up meme stocks and push their share prices to unsustainable levels. Diamond hands aside, Reddit today boasts more than 55 million daily users and has been valued at between $6 billion and $10 billion, though its valuation too has been lowered. The social news aggregation, content rating, and discussion board site is definitely an IPO to watch as we progress through the year.
On the date of publication, Joel Baglole held long positions in NVDA and MS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.