Over the last two years (2022-2023), the IPO market has been a shell of its usual self. Gone are the days of 2020 and 2021’s IPO craze, which saw blockbuster public offerings from the likes of Rivian ($12B), Airbnb ($3.5B), Doordash ($3.4B) and many more. In 2022, the worst year for IPOs in decades, just $7.7B was raised from IPOs — compare that to the average of $50B. 2023 got a bit better, which makes sense given the market’s strength, though the IPO market still only raised $19.4B – less than half of the average.
However, we’re seeing signs that the IPO market is starting to shift back to normal.
Among 2023’s biggest IPOs are the likes of ARM, Instacart, Cava and Birkenstock. Some of these, like ARM (+20% from offering price) and Cava (+64% from offering price) have performed quite well in the early days of their IPO. Additionally, Renaissance Capital’s IPO ETF ($IPO) is up 38% this year — nearly double that of the S&P 500 (+20%). The $IPO ETF is a portfolio of about 60 large IPOs from the last two years.
This recent change in the behavior of post-IPO stocks, coupled with the return of the bull market (which only began in the middle of this year) is leading some companies, including three very large ones, to plan their initial public offerings soon. Here are the three companies that are planning IPOs in 2024.
REDDIT: IPO As Soon As Next Quarter, $15 Billion Valuation
Reddit is a social media platform and online community where users can submit, share, and discuss content in the form of text posts, links, images, and videos. It is organized into “subreddits,” which are themed communities centered around specific topics of interest. Users can upvote or downvote content, influencing its visibility.
Reddit generates revenue through various channels:
- Advertising: Reddit offers advertising opportunities for businesses to promote their products or services. Advertisers can target specific subreddits or demographics to reach their desired audience.
- Premium Memberships: Reddit offers a premium membership program called Reddit Premium (formerly Reddit Gold). Users can subscribe to Reddit Premium for a monthly fee, gaining benefits such as an ad-free experience, access to a private subreddit (r/lounge), and a monthly allotment of Reddit Coins, which can be used to award other users’ content.
- Reddit Coins: Users can purchase Reddit Coins with real money to give awards to posts or comments. These awards are a way for users to show appreciation for quality content and contribute to the platform’s revenue.
- Partnerships and Collaborations: Reddit engages in partnerships and collaborations with other companies. For example, they have collaborated with various organizations for special events, promotions, or content sharing.
While user-generated content is at the core of Reddit, these revenue streams contribute to the platform’s financial sustainability and ongoing development.
Reddit is no stranger to backlash, however. Reddit has had a long list of controversial communities, has been accused of censoring media that is critical of China, and in June 2023 experienced widespread backlash when they began imposing new fees upon their subreddits, leading to a “blackout” across some of the most popular communities on the site.
Reddit was originally planning to IPO in 2022, however, the poor performance of IPOs (and the entire stock market) kept them from going public. Now, Reddit is expected to IPO as soon as next quarter at a valuation of $15 billion — $3 billion more than Rivian’s 2022 IPO. At $15B, Reddit will go public at roughly the same market cap as Logitech, Roku, Nissan, and Mitsubishi.
SKIMS: IPO As Soon As Next Year, $4B Valuation
Skims is a clothing brand founded by Kim Kardashian West in 2019. The brand is known for its focus on comfortable and inclusive shapewear and loungewear. Skims offers a range of undergarments, bodysuits, bras, and other apparel designed to provide a seamless and supportive fit for various body types.
Skims primarily generates revenue through the sale of its products. Customers can purchase Skims items directly from the brand’s website or through selected retail partners. The brand’s popularity is driven by its strategic marketing, celebrity association, and a commitment to offering products that cater to a diverse range of body shapes and sizes. Skims has gained considerable success in the fashion industry, and it’s likely that they continue to expand their product offerings and market presence to drive revenue.
Kim Kardashian’s SKIMS shapewear line is encountering criticism for purportedly engaging in deceptive advertising. The brand is accused of employing greenwashing tactics on certain packaging, leading to concerns about the accuracy of its environmental claims.
Skims plans to IPO as soon as next year, and is seeking a valuation of $4 billion. That will put Skims at a similar market cap to the likes of Macy’s, Gamestop, Harley Davidson, and Lyft.
SHEIN: IPO As Soon As Next Year, $90B Valuation
Shein is an international e-commerce platform that specializes in fast fashion and trendy clothing for women, men, and children. The company was founded in China in 2008 and has since grown to become one of the largest online fashion retailers globally.
Shein generates revenue primarily through the sale of a wide variety of clothing, accessories, and footwear on its platform. The brand is known for its affordable prices, frequent product turnover, and a vast inventory that reflects current fashion trends. Shein operates on a direct-to-consumer model, selling its products directly to customers through its online platform and mobile app.
Key aspects contributing to Shein’s revenue model include:
- Sales of Fashion Products: Shein sells a broad range of fashion items, including apparel, accessories, and footwear, with a focus on providing trendy and affordable options for a global customer base.
- E-commerce: The company relies on its online platform and mobile app for sales, making it convenient for customers to browse and purchase products from anywhere in the world.
- Global Market Presence: Shein has a strong international presence, targeting customers in various countries, which contributes to its widespread customer base and sales.
It’s worth noting that Shein’s business model involves a fast-fashion approach, which means they quickly produce and release new styles to keep up with the latest trends. This strategy, combined with competitive pricing and a large product selection, has contributed to the company’s success and revenue generation.
Shein has accumulated a comprehensive list of controversies. Artists have taken legal action, filing a racketeering lawsuit that alleges the theft of designs. A congressional report has highlighted Shein’s exploitation of a loophole in import tax laws. Additionally, lawmakers have called for an inquiry into the alleged utilization of forced labor, with some claiming that Shein utilizes child labor.
At a $90 billion dollar valuation, Shein is a powerhouse of a company. As of current standings, a $90B valuation would rank Shein as the 162nd largest tradable company by market cap. This would put Shein at a similar valuation to Airbnb, Shopify, CVS and Porsche. For comparison, this is larger than HP, Warner Bros, and GE Healthcare combined.