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5 Rumoured IPOs for 2022

We look at 5 IPOs rumoured to take place in the new year.

Important notes

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.

An Initial Public Offering (IPO) is when a company lists its shares on a stock exchange for the first time. Companies do this to raise money to fund future growth, or to allow existing investors to sell their shares.

Until a company formally confirms it's intention to list on a stock market, all we have are rumours and speculation. This could come from the press or interviews from senior people working at the companies. Typically, IPOs are surrounded with a great deal of once-in-a-lifetime marketing fanfare.

It’s important not to decide if you want to take part in an IPO until you have two key pieces of information – the prospectus and the price.

A prospectus is the most valuable tool for anyone thinking about investing. All companies coming to market have to have one, and they contain everything you need to know. From an overview of potential risks to recent financial data.

The price is just as important. No investment is so good it should be bought at any price. Investors have to make sure the price reflects the value of the underlying company. There are lots of different ways to see how valuable a company is when looking at the price.

More on evaluating IPOs

Once you’ve seen the prospectus, then it’s a good idea to think about the price you’d be willing to pay before seeing what it turns out to be. That way you won’t let the eventual price sway your decision.

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Here’s a look at 5 potential IPOs we may see in the year ahead.

This article is for people who understand the risks of investing in shares, it’s not personal advice. Investing in IPOs and individual companies isn’t right for everyone - it’s higher-risk as your investment is dependent on the fate of that company. All investments and any income they produce will rise and fall in value, so you could make a loss. If a company fails, you risk losing your whole investment.

Investors should make sure they understand the companies they’re investing in, the company specific risks, and make sure any businesses they own are held as part of a diversified portfolio. If you’re not sure of an investment's suitability for your circumstances, please seek advice. Ratios and figures should not be looked at in isolation. It is important to consider the bigger picture. Past performance is not a guide to the future.

Virgin Atlantic

Sir Richard Branson’s been teasing a Virgin Atlantic IPO for some time, but the pandemic threw a spanner in the works. The airline, which operates mostly long-haul flights, has been hammered by the travel restrictions that have kept lots of people from flying for the better part of two years.

Fresh Omicron concerns have prolonged the pain for long haulers like Virgin but hopes that this could be the final phase of the pandemic means a comeback could be on the agenda.

Coming to market would offer Virgin a fresh infusion of cash as it springs back into action to capture a return in demand. This will be a crucial time to spur on growth as carriers work to snatch market share from rivals.

Branson owns 51% of Virgin and the rest belongs to the US’ Delta Airlines, and it has never sold shares to the public before. The group will be looking to strike a balance between getting hold of the cash it needs to get through another challenging winter while avoiding an IPO flop that sees shares sporting a low-ball valuation.

BrewDog

UK beer-brand BrewDog has been luring individual investors to buy shares alongside their beers for some time. Promising perks like a free beer on your birthday, to discounts on merchandise. But coming to market via an IPO is a different kettle of fish. The brewer could have to do a bit more legwork to woo serious investors if it makes a debut in 2022.

The pandemic saw BrewDog’s hospitality income plummet, which ultimately cut cash profits by more than 50%. This isn’t a BrewDog-specific problem though and should start to dissipate as pubs reopen. Still, with a near £2bn valuation, BrewDog has a lot to prove.

That’s roughly 10 times revenue. Stacked up against traditional brewers that have tended to trade somewhere between 2 and 4 times net revenue, that seems pretty lofty.

While it’s testament to the group’s brand, BrewDog will have to convince investors it’s got the potential to grow where its rivals don’t. It’s a tricky proposition seeing as the craft beer market has matured and might not be the growth engine it once was.

Starlink

Starlink is a part of Elon Musk’s SpaceX business, providing internet access via satellites. Rumblings about a potential US IPO began in September 2021 when Musk tweeted a cryptic response to speculation that SpaceX would always remain private.

Eventually, Musk said he would consider taking Starlink public once cash flow becomes more predictable. He also hinted at the possibility of giving Tesla shareholders preference. Musk is no stranger to big ideas, but it’s execution that will ultimately determine whether Starlink can come to market over the next year.

So far Starlink has sent almost 2,000 satellites into orbit and plans to send tens of thousands more. With the space industry possibly reaching $1 trillion by 2040, the potential for growth is staggering.

But criticism that Musk’s satellites are clogging up space could eventually grow into a more serious concern for Starlink. As the business of space evolves, so will the regulations and that could scupper Starlink’s plans. For now, Musk is one of very few people building out the space economy, but anti-competition complaints and safety concerns could eventually keep a lid on growth.

Reddit

US social media platform Reddit announced plans to go public at the end of 2021. There’s no word yet on the pricing or availability of shares, but the group was valued at around $10 billion in August.

Social media platforms have been through the wringer this year as regulators looked to clamp down on the spread of misinformation during the pandemic. This could make the environment for new IPOs in the space a bit more hostile. Investors will be keen to see the company’s got a firm grip on regulating what’s visible on its platform.

For Reddit, this comes with an added layer of complexity. The group’s gathered a lot of attention for its retail trading forum, WallStreetBets. Users flooded into so-called meme stocks throughout the pandemic, which drew the attention of regulators.

Reddit’s not just a place for investors, though. The group’s forums range from how-to threads to common interest groups. As of January, the group boasted 52 million daily active users.

Popularity doesn’t necessarily make Reddit a good investment – we’ll need to know more about how the group plans to monetise its growing user base. Whether it has the means to cope with regulatory intervention is something we’ll have to wait to look out for.

Monzo

Monzo is an online bank that’s been dangling the possibility of an IPO for some time. Unlike traditional banks that rely on bricks-and-mortar locations, Monzo started out as a bare-bones banking app that gave its customers a user-friendly way to bank online. The bulk of its income was – and still is – reliant on transaction fees.

Last year the group ramped up Monzo Business, bringing corporate customers into the fold. Lending has also become a larger focus over the past year, with interest income from loans up to £21.4m from £18.4m. An increase in lending also upped the potential for repayment failure. The result’s been a marked increase in credit loss provisions from 2019.

The bank is still loss-making on a pre-tax basis, with low interest rates and uncertainty in the economy continuing to weigh on Monzo’s future prospects. It’s also the subject of a money laundering investigation.

But the bank secured $500m in new funding in December, which it says will be used to build out a trading platform and cover its losses.

There’s a lot of hype surrounding Monzo, and the IPO speculation is swirling. But with a fresh cash infusion to see it through its next phase of growth, and money laundering concerns looming, we think management could put off a public debut until the back half of the year.

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    Important notes

    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.

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