IPOs tended to stagnate over the past few years, with pandemic-era SPACs assuming the role of investment bankers in bringing companies public. Soon after, higher rates and suppressed stock conditions slowed IPO rates to a fraction of where they once were.
Reddit’s IPO may represent a sea change in IPO prospects – and these three companies are tentatively planning to go public in 2024.
Panera
Panera wasn’t always a private stock. In fact, the company’s public listing returned more than 50% during the year prior to its delisting, which occurred in April 2027 after German conglomerate JAB Holding Company acquired the restaurant.
By comparison, the S&P 500 returned just 7.5% over the same period. But Panera is prepping for relisting, making it one of the top hot IPOs to watch, considering we have a historical record of past performance to forecast its potential.
The bad news? According to internal docs leaked to Reuters, the company seems to be loosening its famously rigorous standards for food quality. Those documents pointed to a $21 million cost-saving initiative to boost pre-listing prospects. This includes the “use of some antibiotics in pork and turkey products” alongside “chicken and cattle to be fed with feed containing animal products.”
While disappointing as a vocal proponent of high-quality food, and particularly meats, this doesn’t make Panera’s IPO any less interesting. If anything, we’ll see whether markets tolerate Panera dipping its toes into cost leadership strategic decision-making. Or will activist investors push for quality retention that drives cash flow, as we generally see with Chipotle (NYSE:CMG) stock?
Shein
Fast fashion brand Shein is debating its current IPO prospects. The discussions aren’t about whether or not to go public, though.
They are discussing whether the company will elect to list on the London Stock Exchange or the New York Stock Exchange. Much of the consternation comes, of course, from souring sentiment against Chinese-based companies in the light of Alibaba Group’s (NYSE:BABA) decline and, of course, the ongoing TikTok drama.
Still, even if listed away from U.S. exchanges, you’ll likely be able to buy Shein stock via ADRs or F-Shares. So, it’s worth keeping an eye on the hot potential IPO. The company’s current valuation is generally tough to pin down.
Yet, recent estimates peg it as high as $66 billion. And, that’s before integrating many recent synergies that could further boost its market cap. For example, the company is working in reverse. They are pivoting from solely digital sales via a partnership with Forever 21 brands. The plan involves Shein clothing being sold in Forever 21’s brick-and-mortar mall retail locations.
Discord
Most closely resembling Reddit’s IPO is the potential Discord IPO on the horizon. The company, boasting over 200 million active monthly users, plans to go public “at some point in the future.” While that isn’t a definitive assurance of a 2024 IPO, the company seems to be shifting toward greater profitability options in advance of the move. Those include sponsorships, in-game monetization tools, and new developer tools to expand offerings.
Sales are already solid, quadrupling to $600 million over the past four years. That makes Discord a cash cow in the making and further improves a potential IPO’s success. Also, the company serves as a private alternative to most social media sites, differentiating it sufficiently to cut down on competition from Reddit and similar stocks. Furthermore, Discord is financially secure enough to have declined a Microsoft (NASDAQ:MSFT) buyout offer in 2021. Priced at $12 billion, the rejected offer gives us a good idea of how valuable Discord’s management sees itself – further increasing IPO potential.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.