An IPO (or initial public offering) is a type of stock market launch where shares become available to retail investors. Here’s everything you need to know about them, as well as our IPO tracker which shows you all the upcoming and rumoured launches.
In 2019, the likes of Beyond Meat and Uber went public, along with lots of other big brands. Despite the turbulence caused by coronavirus, 2020 was a bumper IPO year. It saw the launch of Snowflake, Airbnb and Nikola Motors. 2021 saw Deliveroo, Bumble and Coinbase and many more great IPOs. 2022 was a significantly quieter year, with Volkswagen’s spin-off of Porsche the most notable IPO of the year. The latest market downturn has companies rethinking their IPO plans.
IPOs can be big opportunities to keep tabs on as a trader or investor. You can check out which companies are rumoured to be considering an IPO, which have filed for an IPO and which ones we’re excited for or anticipating at Finder UK.
If you still need to get clued up on what an IPO is and how it works, you can read our guide.
Our experts keep on top of the markets to bring you the latest on what's shaking up stock prices.
12 January 2023: Starling expects profits to quadruple as CEO says crypto lacks "moral purpose’" Starling Bank is expecting to increase its pre-tax profits by more than four times in its upcoming annual financial results. The digital bank said it “generated annualised pre-tax profits of more than £250m on the back of almost £600m of annualised revenue for the month of December 2022”.
11 January 2023: There has been speculation that Ant Group, the Chinese fintech giant will IPO this year. Ant says the company has no plan to IPO, instead the company will focus on business optimisation.
11 January 2023: The UK government is reported to be trying once again to have the London Stock Exchange play a part in the public offering of chip design company Arm. According to the FT, Prime Minister Rishi Sunak hosted Arm chief executive Rene Haas at Downing Street last month in a meeting to discuss the matter. The meeting was joined remotely by Masayoshi Son, the founder and CEO of Arm’s parent company SoftBank.
11 January 2023: Johnson & Johnson’s consumer health unit Kenvue has filed for IPO. The unit has filed to be listed as an independent company under the ticker symbol KVUE. Goldman Sachs and J.P. Morgan are the underwriters for the offering. Upon completion of the IPO, J&J will retain ownership of at least 80.1% of the voting power of shares of common stock.
29 November 2022: Revolut is displaying signals of preparing for an IPO as the company looks to hire a head of investor relations.
A spokesperson for Revolut has stated that the company will IPO when the "time is right and we need to".
Revolut is one of Britain's largest fintech companies and is valued as $33 billion (£27.47 billion).
The UK government is reported to be trying, once again, to have the London Stock Exchange play a part in the public offering of chip design company Arm. Prime Minister Rishi Sunak hosted Arm chief executive Rene Haas at Downing Street last month in a meeting to discuss the matter. The meeting was joined remotely by Masayoshi Son, the founder and CEO of Arm’s parent company SoftBank.
Klarna, a buy-now-pay-later tech company was thought to be preparing for an IPO in 2022. The company was founded in 2005 and operates in 17 countries, including the US and UK. It was recently valued at $46 billion (about £35 billion).
Rumors that TikTok may go public persist, but the latest move by its parent company, ByteDance, suggests that we may see that company stage an IPO first. ByteDance hired a CFO on 24 March 2021 in what reportedly is a move toward a public offering.
Israeli multi-asset brokerage company eToro is expected to go public. Few details are available, but eToro is reportedly in talks with Goldman Sachs Group to lead the offering. The company may also be exploring a SPAC merger as a means to list on the Nasdaq.
Expected to go public: 2023
Ticker symbol: No ticker yet.
Valuation: Expected to be around $10.4 billion (around £7.5 billion).
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What is an IPO?
An IPO is a process where a private company sells shares to public investors for the first time and lists on a stock exchange.
The main reason a company would have an IPO or “go public” in this way is to raise money by selling its shares. The money raised can help the company expand its business further and pay back anyone who’s helped fund it up until that point.
What are the benefits of an IPO?
There are a few benefits of IPOs for companies, but mainly it’s about raising capital and publicity.
The main benefit of an IPO is to raise capital quickly for the business. By issuing shares to a large number of investors, a company can use this cash to grow the business (e.g. research, infrastructure, expansion).
Publicity is another major benefit of an IPO. Lesser-known companies can steal the limelight for a few days or week, which helps increase business opportunities. For example, a publicly listed company comes with a degree of prestige and pedigree. This can also help people attract top talent to the business to help fuel growth.
What are the main disadvantages of an IPO?
IPOs aren’t as easy as deciding you want to do one. There are several reasons why companies don’t choose to float on a stock exchange.
It’s a long process
An IPO can take six to nine months, but it could end up being much longer. During that period, the company’s management team will have to devote a lot of time to the process, depriving them of the time they also need to spend on the business and making it a success.
It costs money
Similarly, an IPO costs a lot of money. Companies usually consult with financial and legal experts, which comes at a big cost. On top of that, once a company is public, it has additional admin duties to fulfill (additional accounting/reporting and more documents to disclose how the business is being run). All of that costs money.
The business has to answer to its shareholders
Part and parcel of going public includes being answerable to shareholders. If shareholders have a big portion of ownership of a company, they can then override management choices and decisions. Shareholders can also vote to remove managers and senior staff. Under pressure to perform well for the shareholders, many businesses end up making poor decisions, focusing on short-term wins instead of building a long-term business.
What is an IPO example?
A recent example of an IPO is Uber, which went public on 9 May 2019. Uber’s price was set between US$45 and US$50 per share with a targeted valuation between US$80 billion and US$90 billion. It announced an IPO with an offering of 180 million shares at US$45 per trade and began trading at US$42 per share on the New York Stock Exchange (NYSE) on 10 May 2019.
It has been a less than 5-star experience for Uber since then, currently trading at just over US$37 per share. This doesn’t mean that Uber’s share price is driving downhill in the future, though. There’s plenty of potential for it to rise again.
What is the IPO process?
When starting out, a company is private. It usually starts with a small number of shareholders, often including the founders’ family and friends and any professional investors.
When the company is at the stage that it wants to “go public”, it starts the process of an IPO. It might choose to make a public announcement of its plans and it starts to advertise to underwriters.
An underwriter prices the shares of the company and the existing shares of the company are converted into public ownership at the new value. The company needs to ensure it meets the requirements for public companies, often needing to appoint a board of directors.
On the IPO date, the company issues its shares.
Is it good to invest in an IPO?
Usually, the initial share price offered by the company is reasonable, but investors investing in an IPO should expect volatility in the share price immediately after the company floats, such as the earlier example from Uber.
Most investors who choose to invest in an IPO do so because of the opportunity to invest in younger companies. The added risk gives a higher potential return, but it also has higher potential losses.
How are IPOs calculated?
Factors that determine the valuation of an IPO include:
Demand for shares
Comparable companies in the industry
Prospects for future growth
Bottom line: Should I invest in an IPO?
IPOs are quite an exciting thing to be involved in, but they can be a bit riskier, as you don’t yet know how the market will react to the listing. Deliveroo’s IPO flop can be seen as an example of this. You should do the research you would usually do when investing and make sure the company’s values are aligned with your own.
Compare platforms to buy shares
If you’re keen on investing in a company soon after its IPO, you’re going to need an investment account. Compare the UK’s leading brands below.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Zoe is a senior reporter at the investing data provider With Intelligence. She was previously a senior writer at Finder specialising in investment and banking and during this time, she joined the Women in FinTech Powerlist 2022. Zoe has a BA in English literature and a Diploma for Financial Advisers. She has several years of experience in writing about all things personal finance. Zoe has a particular love for spreadsheets, having also worked as a management accountant. In her spare time, you’ll find Zoe skating at her local ice rink.
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