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Is the IPO market losing its pizzazz? Bigwigs like Mark Cuban and Bill Gurley certainly think so. But the market is saying otherwise.
In terms of the sheer number of IPOs and the amount of capital raised, 2014 was the best year for IPOs since 2000. We also witnessed the biggest IPO ever, Alibaba Group (NYSE: BABA), which pulled in some $25 billion in proceeds. Here’s a recap of the top IPOs from 2014.
But 2015 could top last year, with some of the most anticipated IPOs in decades.
However, certain big names in the startup space would have you believe otherwise. Mark Cuban, the billionaire entrepreneur and Dallas Mavericks owner, wrote a blog post this month entitled, “Why This Tech Bubble is Worse Than the Tech Bubble of 2000.” It sent much of the startup space up in arms.
Bill Gurley, the venture capitalist and ex-equity research analyst, has been saying the startup space is “frothy” since last year. At this week’s South by Southwest festival he predicted that the startup industry will see “some dead unicorns this year.” Unicorns are companies that reach a $1 billion valuation before an initial public offering.
Some of what Cuban and Gurley are saying might well be true. But the good news is that the companies making our top 10 IPOs list for this year are already well-positioned and aren’t necessarily what you’d call startups.
Plus, the IPO market is holding strong so far this year. The Renaissance IPO ETF (NYSEArca: IPO) is up 5.8% year-to-date, while the S&P 500 is up just 1%.
With that in mind, here are the top 10 IPOs for 2015:
No. 1 Top IPO of 2015: Uber
No IPO list is complete without this controversial mobile app. Its latest valuation puts it at $41 billion, which means it’s 33% larger than Twitter. In the most recent round of financing, Chinese Internet giant Baidu (NASDAQ: BIDU) invested in Uber.
Despite the negative press, Uber continues to be wildly successful. It’s rumored to be bringing in $2 billion in revenue a year. That’s 40% more than Twitter generates a year.
No. 2 Top IPO of 2015: Airbnb
Airbnb, like Uber, is a renegade, challenging decades-old laws. The home sharing company is battling the hotel industry, but with its recent round of financing, it was valued at over $13 billion. That means it’s larger than most of the hotel operators it’s competing against, including La Quinta (NYSE: LQ), Choice Hotels (NYSE: CHH) and Wyndham (NYSE: WYN).
However, fellow home sharing company HomeAway (NASDAQ: AWAY) has had lackluster performance since its 2011 IPO, with shares down 22%. But Airbnb’s website and mobile app has low overhead and is already profitable, meaning it has little need to go public.
Still, I think they’ll give it a shot. There’s no better time than now to IPO.
No. 3 Top IPO of 2015: Dropbox
While file hosting competitor Box (NYSE: BOX) managed to complete its IPO earlier this year, we’re still waiting on Dropbox. However, shares of Box are down 13% since it debuted on the NYSE last month.
Dropbox is great for consumers, while Box seems to be winning out a bit on the enterprise front. The cloud storage industry is still a crowded space, with a number of competitors.
However, I think Dropbox will take the plunge. The company recently hired a new CFO, Vanessa Wittman, who formerly served as CFO of Motorola Mobility.
No. 4 Top IPO of 2015: GoDaddy
GoDaddy makes the list because it’s been trying to IPO for what seems like forever. 2015 will hopefully finally be the year. But that could prove to be difficult. Despite spending a small fortune on ads and making itself a household name, it has nearly $700 million in cumulative operating losses since 2011.
There are also concerns over management’s practices of taking out loans to pay dividends to owners. All this won’t stop bankers from pitching GoDaddy as a great way to play the rise of websites.
No. 5 Top IPO of 2015: Spotify
This streaming music service is dominating the market, with more listeners than Pandora (NYSE: P). But with shares of Pandora down 60% from earlier this year, the appetite for music-related stocks might not be all that strong.
Its latest financing puts its value at $4 billion, which is above Pandora’s $3.2 billion market cap. One of the big differences between Pandora and Spotify is that Spotify generates most of its revenue from subscriptions, while Pandora relies on ads.
No. 6 Top IPO of 2015: Smashburger
With Shake Shack (NASDAQ: SHAK) and Habit Restaurants (NASDAQ: HABT), both having successful debuts in 2014, the fast-casual burger market is bustling right now. In fact, the entire fast-casual market is on fire. The time could be ripe for Smashburger to cash in on the euphoria.
This Denver-based burger joint has some 250 locations and its valuation (per its latest financing in 2013) is upwards of $250 million.
No. 7 Top IPO of 2015: Snapchat
Snapchat has really exploded on the social networking scene over the last couple of years. It’s now valued at as much as $15 billion after a recent investment from Alibaba. This comes after Snapchat rebuffed a $3 billion buyout offer from Facebook in 2013.
Snapchat has really managed to capitalize on the increased interest in privacy. Look for it to bring things full circle with an IPO in 2015. In December, it hired Imran Khan as its Chief Strategy Officer. Khan was the Credit Suisse banker that helped take Alibaba public.
No. 8 Top IPO of 2015: Pinterest
Pinterest would be an interesting public company. It’s a social network that’s nowhere near as big as either Facebook or Twitter. I still think it’s more likely for Pinterest to get acquired, much like Instagram.
But thanks to a 35% surge in Twitter’s stock price year-to-date, and with Facebook trading near 52-week highs, the market appears to be warming up to social media stocks again.
No. 9 Top IPO of 2015: Xiamoi
Xiamoi is the Chinese smartphone company that has a low-cost approach to capture market share quickly. In just three years since launching its first smartphone it’s already the world’s third largest smartphone company. With the $1 billion it recently raised, its valuation is upwards of $45 billion.
No. 10 Top IPO of 2015: Ferrari
Fiat Chrysler Automobiles (NYSE: FCAU) owns 90% of Ferrari and plans to spin off 10% of its stake via an IPO. The other 80% will go to shareholders, with 10% still owned by the Ferrari family.
This name is likely flying under a lot of investors’ radars, but it will be a prized asset for many investors. Analysts put the value of the luxury car brand upwards of $7 billion. Brand Finance named Ferrari the most powerful brand in the world last year.
Notice that Square isn’t on our list. While the mobile payments company made our list of upcoming IPOs of 2014, it didn’t quite make it to the public market.
Now I’m not so sure that Square will even get it done in 2015. The competition has steadily been on the rise and Apple Pay is proving to be a hit. But it is worth noting that Square raised $150 million in October at a $6 billion valuation.
While a few of the companies on our top 10 IPOs list might not go public in 2015, you can rest assured that the ones that do will have some serious fanfare. The much anticipated public debuts of Uber, Airbnb and Snapchat are poised to make 2015 one of the biggest years ever.
Big enough to top the dot-com bubble of 2000? Perhaps.
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