It’s been a tough year for initial public offerings (IPOs). With most of the major indexes worldwide mired in a bear market, new share listings have dried to a trickle in 2022. Through the first half of this year (January to June), U.S.-listed companies raised $4.8 billion via IPOs. That compares with $155 billion raised in 2021 when markets were still frothy and rising rather than plummeting. As of December 1 this year, money raised through U.S. IPOs was down 93% versus 2021, according to New York Stock Exchange data.
Understandably, many companies planning to go public have hit the pause button until markets and investor sentiment improves. The good news is that several high-profile and eagerly anticipated IPOs are expected to happen in the New Year should global market conditions improve. These companies have been planning to go public for years and are just waiting for the timing to turn in their favor. Here are three new stocks investors should watch for in 2023.
Many investors are eager to get their hands on Stripe, the Irish e-commerce company that is billed as the most valuable privately held technology start-up in the world. The company, which is co-headquartered in San Francisco and Dublin, Ireland, was valued at $95 billion in a March 2021 funding round. The company lowered its own valuation to $74 billion this past summer as market and macroeconomic conditions deteriorated.
Regardless of the lowered valuation, large and small investors eagerly await Stripe’s IPO. The company develops software for payment processing on e-commerce websites and mobile applications.
Stripe has been musing about going public for years, and there have been reports that the company has hired a law firm to help it with the process. Other reports have said that Stripe is considering a direct listing rather than a traditional IPO.
However, it is structured, and whenever it happens, Stripe is one IPO that investors should keep on their watchlist in 2023.
The leader in online grocery delivery in both the U.S. and Canada, Instacart’s chief executive officer (CEO) Apoorva Mehta has been talking openly about wanting to take the company public since 2019. Unfortunately, the pandemic and subsequent market rout have forced Instacart to put its plans on hold. But 2023 could be the year for Instacart’s long-awaited IPO should markets rebound and sentiment improve.
As a clear sign that Instacart is chomping to hold its IPO, the company filed the paperwork to go public with the U.S. Securities and Exchange Commission (SEC) in May 2022. The company, which is based in San Francisco and operates a top-rated online grocery delivery service, was most recently valued at $14.7 billion. Like all tech companies, Instacart’s valuation is down due to the current market volatility. But it is likely to rise again when conditions become more favorable.
Social media company Reddit is best known these days for its WallStreetBets subreddit group, where retail traders congregate to talk up meme stocks and push their share prices to unsustainable levels. The social news aggregation, content rating, and discussion board site saw its popularity (and notoriety) grow during the pandemic as people sheltering in place at home used it to discuss everything from stocks and public health measures to food recipes.
Like Stripe and Instacart, Reddit is based in San Francisco. Also, like those two other companies, Reddit has been waiting for the right time to hold its IPO for years. The company filed confidentially to go public in December 2021, but its timing couldn’t have been worse, coming as it did just after markets peaked and began to turn southward. But Reddit hasn’t given up on its plans to publicly list its shares, and 2023 could be the year it finally executes its IPO.
Today, Reddit boasts more than 50 million daily users and has a valuation of $10 billion to $15 billion. Given investor interest in social media stocks, Reddit can be expected to be a new stock to watch for in 2023.
Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.