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IPOs in 2020 – Don’t miss this year’s new launches

IPOs can offer exciting opportunities. It’s often the first chance to invest in a major, global brand. We look at 4 IPOs rumoured to take place this 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.

Nicholas Hyett, Equity Analyst
Equity Analyst

Published on 9 January 2020

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

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 allow existing investors to sell their shares.

IPOs can offer exciting opportunities. It’s often the first chance to invest in a major, global brand.

2020 looks set to start on a much better footing than 2019. Brexit may be far from settled, but a large government majority should make the process easier. A looming US presidential election seems to have calmed relations between the US and China too. More stability and extra certainty bode well for the deal-making environment and help to reduce the risk surrounding IPOs, though like any investment they still have risks and can fall as well as rise in value, so investors can lose money.

Until a company formally announces its intention to float on the stock market, IPOs are shrouded in secrecy, with only rumours to go on. Below we look at four companies said to be considering an IPO soon.

If you’re interested and want to participate, register for our free IPO alerts and you could be among the first to hear about any IPOs available online through HL.

ASDA

Walmart recently tried to merge ASDA with Sainsbury’s, but the deal was scotched by the UK competition authorities. While the supermarket’s US owner would probably prefer to sell the company directly, an IPO might be the best available option - allowing Walmart to monetise at least part of the business.

Comments from management earlier last year suggest a stock market listing is still some way off, but 2020’s not impossible. An operating profit of £803.2m makes ASDA about as profitable as Sainsbury's and so it would be a major addition to the UK stock market.

Palantir Technologies

Big Data firm Palantir, named after Tolkien’s “seeing stones” in the Lord of the Rings, has been flirting with an IPO for a while. Co-founded by Peter Thiel, who also helped start PayPal, the firm offers data analytics services to governments and the private sector. That’s generated controversy, particularly as the group has been linked to Cambridge Analytica and has done work for US Immigration and Customs Enforcement.

A valuation is hard to pin down, but we’ve seen figures ranging from $26bn to $41bn.

Airbnb

Back in 2007, Airbnb’s founders responded to San Francisco’s hotel room shortage by hosting guests themselves, breakfast included, for the grand sum of $80 a night.

Since then Airbnb’s grown to become a core part of travel itineraries, with approximately six people checking into an Airbnb listing every second. There are now more than 7 million listings, in over 100,000 towns and cities - more than the eight largest hotel groups combined.

Despite being a big name in travel, we still don’t know much about Airbnb’s finances, so a price tag’s harder to come by. Quarterly revenues reached $1bn for the second time in 2019, but the big question for investors will be over profitability and pace of future growth. The group was last valued at $31bn in 2017.

It’s unlikely that UK retail investors will be able to participate in any IPO of Airbnb – a common problem for US listings. However, we can let you know when the stock will start trading.

Postmates

Here in the UK, a takeaway might be delivered by Deliveroo, a food shop by Ocado and an emergency plumbing part by Amazon Prime Now (if you’re in the right city). At the moment there’s no service that can offer all of these, and pick up some beers for us on the way.

In the US though, there’s Postmates. Founded in 2011, it pioneered the on-demand delivery movement in the US, offering delivery from a whole host of restaurants and stores. The company takes a fixed delivery fee, a percentage of the bill and also offers a subscription service for unlimited free delivery. Postmates operates in around 3,000 cities and provides access to over 250,000 merchants.

The company, last valued at around $2.4bn, had intended to IPO in 2019, but held off due to choppy market conditions. It’s set to try again in 2020 and investors will be keeping a close eye to see if it could be the start of new global delivery format.

IPO alert service

IPOs aren’t always open to private investors but when they are they happen very quickly, without much warning and some private investors miss the opportunity to find out more and participate.

Sign up to our alerts and you could be among the first to hear about any IPOs available online through HL. This normally doesn’t include US IPOs as UK investors are not able to take part in these.

Any publication of an IPO on our website is not an endorsement of the issue. Your decision to invest in an IPO should be made solely on the basis of the Prospectus, and any supplementary information. The specific risks will be detailed in the Prospectus.

Companies subject to an IPO may not have a long track record and could be difficult to value or calculate a fair price for. IPOs and bond launches are therefore only likely to be a consideration for more diverse, larger portfolios. In many IPOs you will not know the purchase price before you commit to buy and therefore might end up buying at a higher price than you wished. All investments can fall as well as rise in value so you could get back less than you put in.

Register now for our IPO email alerts direct to your inbox to make sure you are kept informed of IPOs available online through Hargreaves Lansdown. Remember this is not personal advice – you will need to make your own decision on whether it is right for you to invest. If you have any doubts as to the suitability of an investment for your circumstances you should seek expert advice.