Top IPOs to Watch in the Latter Half of 2022

As of now, 159 companies in the US have filed for IPOs and will be going public before the end of 2022. The Initial Public Offering market is currently negatively impacted by the risks of a global recession and the rate hikes by the world's largest central banks. We’ve already discussed the reasons for the IPO sector's decline earlier.

However, despite the current difficult times, some companies are sticking to their decisions to go public. In this article, we’ll take a closer look at the firms that are planning to file for an IPO this year: Instacart, Klarna, ThoughtSpot, Epic Games, Impossible Food, and Mobileye.

1. Instacart

Delivery and pick-up service Instacart announced its intention to go public as early as the beginning of the year, but the estimations of the company’s business and financial performance were revised soon after. Instacart was established in 2012. Its major target markets are the US and Canada.

Instacart introduced a new algorithm, a “click-and-collect” service, whereby users add all ingredients required for preparing a particular dish from the Shoppable Recipes service.

During the latest round of financing, the issuer raised $265 million with capitalisation estimated at $39 billion. However, in the spring, Instacart reduced its capitalisation by 40% to $24 billion. This decision was made due to the pessimistic sentiment of major market players and their concerns about a possible recession in the US.

In May 2022, Instacart filed a request to the SEC to go public on the NASDAQ. The IPO date, the number of shares, and the company’s financial performance haven’t been announced yet. The company’s top management stated that the company was planning to hold an IPO before the end of the year, probably through a direct listing.

2. Klarna

Klarna, a Swedish company, is the most expensive fintech startup in the European Union. The issuer’s product is extremely popular in eCommerce. Thanks to Klarna, clients of online shops can buy goods on the installment plan without having to register a lot of personal details. Loan approval is given based on the risk assessment framework through AI technologies developed by Klarna.

Clients are not charged with interest for using loans – the issuer earns on the commission paid by merchants. The key advantage of Klarna’s product is captured in its motto, “Buy now, pay later”.

The issuer cooperates with such big-time retailers as Ikea, Adidas, and Inditex. At the same time, Klarna also works with smaller companies, for example, iSmash, which has just a couple of dozens of shops in London and Manchester. The total number of brands doing business with Klarna is over 250 thousand.

More than 18 million people all over the world use the product of the Swedish startup – this number gained 50% in the last year. During all rounds of financing, the company raised $3.7 billion in investment. Its capitalisation is estimated at $31 billion, but this reading will be reduced under current market conditions. Details of the IPO are currently unknown.

3. ThoughtSpot

ThoughtSpot is an AI-based analytics search platform. Using the platform doesn’t require any deep technical knowledge and expertise: visualisation features allow analysing values, generating reports, and creating dashboards.

The application provides connections to any local, cloud, and other data sources. All a user has to do to get results quickly is input a query and leave everything else to the company’s AI-based system SpotIQ.

In 2020, ThoughtSpot also introduced ThoughtSpot Cloud, a fully managed SaaS solution, which combines popular cloud storage. Since then, the company has been using cloud technologies as the key method of distributing its products.

ThoughtSpot’s clients include Walmart, BT, Siemens, Daimler, Hulu, T-Mobile, Royal Bank of Canada, Bank of West, and Nationwide Building Society.

The issuer has already raised $563.7 million in investment. During the ninth round of financing that took place in August 2019, ThoughtSpot attracted $248 million. Among the company’s investors are Silver Lake Waterman, Lightspeed Venture Partners, Khosla Ventures, and Sapphire Ventures. Details of the IPO haven’t been published yet.

4. Epic Games

Epic Games develops and markets video games. The list of games created by the company includes such popular titles as Fortnite, Gears of War, Shadow Complex, Infinity Blade, and Unreal. Since April 2022, the issuer has been focused on developing virtual spaces for work and entertainment. Its premier partners are Kirkbi and Sony.

This spring, Epic Games raised $2 billion and its capitalisation was estimated at $32 billion. If the company files for an IPO, underwriters will revise this reading. Another possible option for the company is through a direct listing. The most probable IPO date is December 2022.

5. Impossible Food

In the last few years, plant-based meat substitutes have been growing in popularity, and these products are exactly what Impossible Foods produces and distributes. Experts are expecting meat consumption to decline by 33% by 2040.

Plant-based meat substitutes are no longer part of a specific niche; they are becoming a mass consumption product in food outlets in the US. Impossible Foods’ products can be found in Walmart, Lidl, and Burger King.

The key bottleneck that prevents plant-based meat substitutes from expanding is their expensiveness. Impossible Foods’ main objective is to reduce its production costs. The potential target market might reach $85 billion by 2030.

Since the company was established, it has raised over $1.5 billion in investment. Impossible Foods’ capitalisation is currently estimated at $10 billion. However, the issuer might have to reduce this value.

6. Mobileye

Intel is planning to hold an IPO for its subsidiary Mobileye, which specialises in developing cameras, computer chips, and software.

Mobileye’s products are very popular with car makers: advanced driver assistance systems, ADAS, are based on the company’s out-of-the-box solutions. ADAS is already installed in vehicles manufactured by BMW, Volvo, Nissan, Honda, GM, and other car makers.

In addition, the company develops and manufactures self-driving vehicles. According to Intel management, Mobileye’s sales in 2021 were $1 billion, that’s why the company can count on investors’ high estimates.

Summary

Despite the inactive IPO market, large companies stick to their decisions to go public. However, they will have to reduce capitalisation estimates, so that retail investors can buy their shares, increasing issuers’ potential profit.