As the year 2023 progresses, the IPO landscape continues to captivate investors with some big names and industries. It is no secret that the IPO market offers a diverse range of opportunities for those willing to take the plunge. A vivid portrayal of our times one might argue, given that some of the top IPO opportunities revolve around social media, alcohol, and AI.
Interestingly, companies with lower valuations often exhibit greater volatility, presenting the potential for high returns. On the other hand, entities with higher valuations tend to offer more stability, albeit with potentially lower risk and returns. Consequently, investors with varying risk appetites are strategically diversifying their portfolios across both categories.
Following the surprising outperformance of the S&P 500 index during the first half of 2023, contrary to the skepticism expressed by critics, several hedge funds are tactfully venturing into the IPO market in search of promising opportunities. This strategic move comes as the S&P 500 market shows signs of approaching an overextended phase, prompting investors to seek potential value in the IPO space. The cautious exploration of the IPO market by these hedge funds reflects a measured approach to diversify their portfolios and capitalize on emerging prospects amid concerns of potential market overheating within the S&P 500.
Within the following list, we present a compilation of both recent and upcoming IPOs, encapsulating the dynamic landscape of the market. Notably, the remarkable performance exhibited by some of the latest IPOs sparks a thought-provoking question: Is 2023 poised to be the year of unforeseen surprises in the world of initial public offerings?
#1 Reddit
The anticipation surrounding the potential Reddit IPO has been growing steadily, leaving investors eager to witness the listing of this prominent player in the social media arena as an independent entity. Unlike many other platforms that have succumbed to acquisition by larger players such as Meta and LinkedIn, Reddit’s estimated valuation of $10 billion presents a unique opportunity for it to go public on its own terms.
As the social media landscape witnesses declining user numbers, there remains uncertainty about how the market will respond to another entrant like Reddit. However, the platform’s distinctive format and impressive daily active users (DAU) count position it as a potential investment opportunity, even amidst the challenges faced by the digital advertising sector. While the attention surrounding this IPO may be substantial, its potential impact on the market remains to be seen.
#2 Discord
Discord has an estimated valuation of $15 billion and it’s IPO valuation remains unchanged from a year ago. Set to benefit from the gaming industry’s growth, particularly online gaming, Discord’s strong user base and diversified revenue streams make it a promising prospect for a 2023 IPO.
#3 LQR House Inc.
LQR House Inc., a Miami Beach-based digital marketing and brand development company for alcoholic beverages in the U.S., is garnering attention as it prepares for its highly anticipated IPO. This opportunity stands out as a rare investment venture in the alcohol industry. While alcohol consumption remains consistent even during economic downturns, IPOs in this sector are infrequent due to established conglomerates often acquiring successful alcohol brands.
Founded in 2021, LQR House Inc. has swiftly gained recognition for its exceptional campaigns focusing on tequila, wine, and other specialty products. Impressively, the company has already secured $5.8 million in fair market value investment as of March 31, 2023, with notable investors such as KBROS, Joel Abbo, and Index Equity US LLC. In a bid to fuel further growth, the company aims to raise an additional $5 million through a micro-IPO of its common stock. With the expanding influence of digital marketing in the beverage industry, LQR House Inc. has the potential to redefine the game.
#4 GEN Restaurant Group, Inc. (GENK)
GEN Restaurant Group, Inc. debuted on June 28, with shares priced at $12.00. The restaurant group experienced a stellar first day, with its stock price skyrocketing to $19.15, a gain of 61.50%.
#5 CAVA Group, Inc. (CAVA)
Cava Group, the fast-casual Mediterranean restaurant chain, recently made its highly anticipated debut on the New York Stock Exchange, trading under the ticker symbol “CAVA.” The company successfully sold 14.4 million shares, raising an impressive sum of nearly $318 million. This milestone IPO valued Cava at approximately $2.45 billion, shining a spotlight on the restaurant chain’s potential and inspiring other players in the industry to consider following suit.
While Cava was established in 2006, it gained significant traction after opening its first fast-casual location in 2011, drawing inspiration from the successful build-your-own model pioneered by Chipotle Mexican Grill. With a focus on introducing customers to new flavors like harissa and tahini, Cava positioned itself as a healthy and convenient dining option, gradually building a loyal customer base. Notably, the company expanded its reach by retailing its popular dips, spreads, and salad dressings in grocery stores. In a strategic move, Cava acquired Zoes Kitchen in 2018, taking the rival Mediterranean chain private for $300 million. Over the past five years, Cava has successfully converted Zoes Kitchen locations into its own restaurants, contributing to its current footprint of 263 locations as of April 16. Demonstrating its growth trajectory, Cava reported a notable increase in net sales last year, with revenues reaching $564.1 million, marking a 12.8% growth compared to the previous year.
#6 Shengfeng Development Limited (SFWL)
Real estate developer Shengfeng Development Limited went public on March 31, 2023, at $4.00 per share. By the end of the trading day, the shares had increased by 44.75%, closing at $5.79.
#7 ICZOOM Group Inc. (IZM)
ICZOOM Group Inc., a tech firm specializing in digital solutions, launched its IPO on March 15, 2023. The company’s shares were initially priced at $4.00 but soared to $5.70 by the end of the trading day, marking an impressive increase of 46.00%.
#8 Nextracker Inc. (NXT)
On February 9, 2023, renewable energy company Nextracker Inc. went public with an IPO price of $24.00. By the close of the day, the shares had surged to $39.59, signifying a strong increase of 62.40%.
#9 Structure Therapeutics Inc. (GPCR)
Structure Therapeutics Inc., a biotech company focused on developing innovative therapeutics, made its market debut on February 3, 2023. The company set its IPO price at $15.00. However, the shares had more than doubled to $33.55 by the end of the day, recording a stunning rise of 121.53%.
#10 Genelux Corporation (GNLX)
Biopharmaceutical company, Genelux Corporation, saw a stellar IPO on January 26, 2023. Initially priced at $6.00, the company’s shares skyrocketed to $27.93, marking an extraordinary increase of 351.67%.
#11 Skyward Specialty Insurance Group, Inc. (SKWD)
Skyward Specialty Insurance Group, Inc., a leading provider of specialty insurance solutions, made its market debut on January 13, 2023. The shares, initially priced at $15.00, rose to $24.51 by the end of the day, marking an increase of 64.13%.
#12 Mobileye
Mobileye, an Intel subsidiary, stands to be one of the most sought-after IPOs in 2022. Engaged in the manufacture of chips and software for self-driving cars and advanced driver-assist systems, Mobileye is responding to the world’s growing demand for microchips and semiconductors. Intel acquired the company for $15 billion in 2017 and plans to remain the majority shareholder post-IPO. Despite the volatile market conditions, Mobileye is pushing forward with its IPO, with a potential listing slated for the first half of next year. It has an estimated valuation of $17 billion.
#13 Prestige Wealth Inc.
Prestige Wealth Inc., a wealth management firm, held its IPO on July 6, 2023. The company’s stock opened at $5.00 and skyrocketed to a closing price of $18.72. This spectacular rise represented a whopping 254.00% gain and marked the company as one of the year’s most successful IPOs.
#14 Vinfast
Vinfast is a Singapore-based subsidiary of the Vietnamese business conglomerate Vingroup, produces electric vehicles (EVs). While the company had ambitious plans to raise $60 billion in an IPO, market turbulence and increased competition in the EV space have led to a revised estimate of $30 billion. Vinfast’s proposed EV factory won’t be operational until 2024, making this a speculative investment in an unpredictable market.
#15 Databricks
Databricks, a prominent name in IPO discussions, has significantly grown its subscription-based revenue over the last two years. With its AI-driven software and backing from major cloud providers like Alphabet, Salesforce, Microsoft, and Amazon, Databricks is well-positioned for a successful listing. The estimated valuation is $30 billion.
If AI is one of the reasons economists became upbeat about the S&P500 – and some of the biggest benefactors of this growth spurt also back Databricks, then this is a company to watch very closely.
#16 TikTok
TikTok, the Chinese social media sensation with an estimated valuation of $300 billion, finds itself at a crossroads amidst concerns and potential challenges. As other social media platforms grapple with declining user numbers, the future of TikTok’s dominance is being questioned. While it is anticipated that TikTok will pursue a listing on either the Shanghai or Hong Kong exchanges in 2023, its once-unassailable position as a social media darling appears to be waning.
These uncertainties, combined with recent bans imposed on TikTok in certain states, have instilled fear and apprehension among investors with a low-risk appetite. However, amidst the caution and concerns, there exists the potential for a truly transformative investment opportunity if legal issues can be effectively managed. While TikTok’s journey may face hurdles, those who can navigate these challenges and keep legal concerns at bay might seize a once-in-a-lifetime opportunity.
#17 Chime
Chime had planned a March 2022 IPO, but with fintech stocks taking a hit, the company postponed its listing. The fintech industry’s sluggish performance in 2022 has not deterred Chime, which may make its move in 2023. Its valuation is estimated to be $24 billion.
#18 Epic Games
Epic Games, renowned for creating hit titles like Fortnite and Gears of War, remains a strong contender for a potential IPO in 2023. Despite the current market climate, the company’s extensive track record of developing chart-topping video games positions it favorably for a successful public debut. With an estimated valuation of $30 billion, Epic Games continues to demonstrate its market value, having reached a valuation of $32 billion in 2022. The tremendous success of Fortnite, amassing over $20 billion in revenue since its release in 2017, further strengthens the company’s prospects.
Notably, Epic Games has been actively pursuing strategic acquisitions in recent times, including RAD Games, Tonic Games Group, Capturing Reality, ArtStation, Sketchfab, Harmonix, and Bandcamp, signaling its commitment to expansion and innovation. Additionally, fans can look forward to a forthcoming Gears of War movie, showcasing the franchise’s enduring popularity across various entertainment mediums. Moreover, Epic Games goes beyond game development, offering the widely acclaimed Unreal Engine, a popular technology for creating video games. With such multifaceted endeavors, Epic Games stands as a significant player in the gaming industry, poised to make a substantial impact with its potential IPO.
Recent IPO performance:
The bulls take pride in pointing out that in recent IPO news, several companies made their market debuts with above average performances. ODDITY Tech Ltd. (Ticker: ODD) caught investors’ attention with an impressive 35.80% increase in its closing price on July 19, 2023, compared to its IPO price of $35.00.
Apogee Therapeutics, Inc. (Ticker: APGE) also had a positive start, witnessing a 21.47% surge in its closing price on July 14, 2023, after going public at $17.00. Meanwhile, Nabors Energy Transition Corp. II (Ticker: NETD) experienced a modest 1.40% increase, closing at $10.14 on the same day as its IPO. Sagimet Biosciences Inc. (Ticker: SGMT) faced a slight downturn, with its closing price of $15.97 on July 14, 2023, slightly below its IPO price of $16.00. Bowen Acquisition Corp (Ticker: BOWN) also saw a comparable 1.40% increase in its closing price on July 12, 2023. However, 60 Degrees Pharmaceuticals, Inc. (Ticker: SXTP) encountered a significant decline of 37.74%, closing at $2.89 on July 12, 2023, after being priced at $5.30. These recent IPO performances reflect a mix of positive and negative outcomes, highlighting the volatility and potential opportunities within the IPO market.
Finally, it is fair to ask: will the above trend continue? The answer to that question remains uncertain, and only time will reveal the direction the market will take. As the IPO landscape continues to evolve, it is important for investors to closely monitor these developments and assess each company’s unique circumstances. The coming days and weeks will shed light on whether this pattern of mixed IPO performances will persist or if new trends will emerge. Stay tuned as we await further updates and market insights to gain a clearer understanding of the future trajectory of IPOs.
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