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5 rumoured IPOs for 2024

Could the IPO market come roaring back to life in 2024? Here are 5 rumoured IPOs we could see next year.

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

When a company lists its shares on a stock exchange for the first time, it’s called an initial public offering (IPO).

There’s growing optimism the IPO market could come roaring back to life next year. But this will depend on what happens to interest rates and the market’s appetite for higher-risk growth stocks.

Investing in a company listing shares for the first time can offer opportunity – getting in before valuations have had a chance to grow can be better than opting in when they peak. At the same time, investing in an IPO can be risky.

Investing is for the long term, that's at least five years – you need to have confidence in the long-term prospects of any company you're investing in.

Past performance isn't a guide to the future. Investments can fall as well as rise in value, so you could get back less than you put in.

Investing in IPOs, share offers and individual companies isn’t right for everyone. It’s a higher-risk way to invest your money. When a company first lists on the stock market, its share price can rise and fall quickly. If the company fails, you could lose your whole investment. You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio. If you’re not sure if an investment’s right for you, ask for financial advice.

Here are five IPOs rumoured for next year.

Databricks

There’s a lot of excitement about a Databricks IPO.

Databricks, a cloud-based data storage and software giant, was valued at $43bn in September and Nvidia was an early investor.

The artificial intelligence (AI) boom would be a tailwind and should offer a structural growth opportunity. Databricks itself isn’t ignoring the hype, having acquired generative AI company MosaicML for $1.3bn in June. The company is hoping it can integrate this tech into its own products.

We know the group has about $1bn in annual revenue, with at least $100mn in recurring revenue. So, there’s a lot to like about Databricks.

However, the attention around it means the final valuation might end up being too frothy to be attractive.

Fanatics

Fanatics is a global sports merchandising powerhouse, supposedly valued at around $31bn. Interest is building and industry bigwigs have been seen attending investor days recently. Fanatics is also building its exposure to the sports cards market.

As a market, we like the corner that Fanatics inhabits. Sports fans are very loyal, and that can translate into sticky revenue. There are some big questions that will still need answering if Fanatics decide to IPO – one will be valuation.

While we agree the end market is strong, merchandise isn’t the most capital-light of businesses, so understanding the share price-to-earnings ratio will be important.

Klarna

Buy-now-pay-later (BNPL) is embodied by Swedish company Klarna. It’s a good way for consumers to manage their cashflow and offers more financial flexibility. But the growing pressure on consumer spending can put these companies in the firing line.

The higher-interest-rate environment led to a big reduction in Klarna’s valuation and the workforce was cut. An IPO is unlikely until things get better.

Still though, there are positives. We like software-based companies and longer term, BNPL products could see feisty demand.

Investors will need to keep an eye on the regulatory environment though. There are concerns that BNPL companies should be doing more to safeguard the financial wellbeing of their customers.

Reddit

The Reddit IPO rumour mill has been running for a couple of years now. The group makes its money selling advertising space, as well as premium ad-free subscriptions.

These are like the business models of other social media companies, and when the going is good, it’s a capital light and profitable way of doing business.

Last year, estimates had Reddit advertising revenue at $503mn – a big increase on the year before.

The landscape for advertising spending is closely linked to the economy though. If 2024 brings a recession, this could impact the valuation Reddit can get and increase the risks of ups and downs.

Stripe

Stripe is a payment service provider. Operating kind of like PayPal, Stripe lets merchants accept credit and debit cards or other electronic payments. Its offerings are supposed to be more suitable for larger companies, as well as those with a bigger focus on online sales.

Stripe’s already raised billions from new and existing investors, and there’s excitement about the group’s end markets, and it’s growing. The growth in ecommerce is something that Stripe is ready to benefit from, although the valuation of $50bn earlier this year is below the peak seen in 2021.

That’s likely due to the tempering of markets after the pandemic. Stripe’s product has potential in our opinion, but remember, all share prices can go down as well as up.

Want to find out more about the latest IPOs?

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NatWest retail share offer

And one other thing. While not an IPO, Chancellor Jeremy Hunt said in his 2023 autumn statement the UK government would investigate selling its 38% ownership of NatWest. Part of this plan could well be a potential share sale to retail investors in the next 12 months.

Sign up for our alerts to stay up to date with the latest news, including:

- If the UK government confirms plans to sells NatWest to retail investors

- If you can take part in the retail share offer

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Written by
Sophie Lund-Yates
Sophie Lund-Yates
Lead Equity Analyst

Sophie is a lead on our Equity Research team, providing research and regular articles on a selection of individual companies and wider sectors. Sophie's specialities are Retail, Fast Moving Consumer Goods (FMCG), Aerospace & Defence as well as a few of the big tech names including Facebook and Apple.

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Article history
Published: 18th December 2023