Posted on 10 August 2013.
By John Coviello
2014 IPO Outlook | What’s Hot and What’s Not
The 2014 IPO outlook is looking quite interesting, as several high profile Initial Public Offerings (IPOs) are expected during 2014. Once again, Internet companies and companies in computer related industries are the hottest IPOs on the 2014 IPO calendar. A new wave of Internet companies that have been established over the past decade and the move towards cloud computing and file sharing is driving much of the current IPO activity. These young companies have relied upon private investors to provide funding during their start-up and early operating stages. As they have matured into established operating companies, the need to go public via an IPO has become more urgent since private investor avenues can only provide a limited amount of funding, and early investors and company insiders want to unlock the value of the private stock that they hold in the companies.
Another factor that indicates that the 2014 IPO outlook is strong is the expected strength of the United States economy during 2014. While 2013 has been a sluggish economic period for the United States, economic growth is expected to accelerate towards the end of 2013 and remain robust during 2014. A strong economy and a healthy stock market often prods companies to follow through on their plans to go public via an IPO. Investor enthusiasm is necessary for successful IPOs. Companies realize that good times do not last forever in the economy and the stock market. To generate the most revenue from an IPO for future corporate purposes, companies understand that it is best to undertake an IPO during strong economic times, while investors are looking to invest in companies going public via IPOs.
2014 IPO Outlook | Possible Hot 2014 IPOs
While there will be many IPOs during 2014, there are number of IPOs that will likely be hot IPOs that are highly sought after by the Wall Street investment community. The following 2014 IPO outlook highlights some of the high profile IPOs that are likely during 2014 and may be worth tracking for possible IPO investment and trading ideas.
- Twitter – The highest profile potential IPO on the 2014 IPO calendar is the Twitter IPO. Twitter, the social networking company, is one of the best known second generation Internet (Internet 2.0) companies that has not yet transitioned into a publicly traded company via an IPO. Twitter has proven to the Wall Street investment community that it has a viable business model that can generate real revenues. In 2013, Twitter is expected to generate revenue in the neighborhood of $600 million, which is expected to pass $1 billion during 2014. Twitter’s solid and growing revenues, and the ability of Wall Street analysts to understand their business model and project future revenues sets the Twitter IPO apart from many other second generation Internet IPOs in recent years. This transparency and the fact that Twitter is a well known company, is likely to make the Twitter IPO the hottest IPO since the Facebook IPO occurred during 2012.
- Box – The Box IPO is expected to be one of the more highly anticipated IPOs on the 2014 IPO calendar. Box is one of the leading companies in the fast growing cloud-based storage Internet sector. Box’s achievements have been impressive, which has caught the attention of the Wall Street IPO investment community. The company is a provider of cloud storage services to more 125,000 businesses and 11 million customers. Their business clients include more than 80% of the companies currently on the Fortune 500 list. While Box’s revenues are relatively modest, the high growth of the Internet sector that the company operates in gives investors reason for future optimism. While many companies dodge questions about a potential future IPO, Box’s Chief Executive Office (CEO), Aaron Levie, has publicly indicated that Box is driven to go public to avoid being acquired by a larger competitor and to provide future funding, as well as to reach full valuation.
- Redfin – Redfin operates an online real estate brokerage (Redfin.com) that allows users to search for and view homes for sale via a map view. The site provides information about homes, including sales records and past appraisals. Instead of sending users to third-party realtors, Redfin has their own team of realtors that assist site users with making arrangements to see and buy homes. Redfin’s Chief Executive Officer (CEO), Gleen Kelman, has stated that the company intends to go public via an IPO during 2014.
Possible Hot IPOs That May Be Pushed Off Until 2014
The following IPOs may either occur during late 2013 or during 2014. The IPO market is notoriously volatile, as IPO plans are often delayed due to a variety of factors, from company-specific factors to overall stock market sentiment. Therefore, even though the following IPOs are expected before 2013 is over, some of them may very well be delayed until 2014, and are worth keeping an eye on.
- Square – Square is a leader in the high growth online electronic payments and payment processing sectors.
- Eventbrite – Eventbrite is a major player in the event planning and ticket processing sectors.
- Dropbox – Dropbox is a leader in cloud based the file sharing and online file storage sectors.
- Gilt Groupe – Gilt Groupe runs one of the best known “flash sales” sites on the Internet.
- LivingSocial –LivingSocial is the second largest “daily deals” site on the Internet, behind Groupon.
Since the IPO market is so volatile, it is a good idea to periodically check the various IPO calendars that are available on the Internet for an update on the 2014 IPO outlook. While IPOs such as Twitter and Box are likely to dominate the IPO market in 2014, there will likely be some hidden gems IPO during 2014 that will present real value to IPO investors.