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IPOs in 2021: Which companies will take off soon?
In the past year, many planned IPOs were postponed due to the Corona crisis in Germany and around the world. Various companies have planned to go public in 2021. The first offering of shares is known as an IPO. Which companies are planning to go public?
What actually is an IPO?
If you want to invest in companies that are planning an IPO in 2021, you should first know what an IPO is. IPO is the abbreviation for Initial Public Offering. That means nothing more than a new issue, i.e. the initial offering of shares. A company that goes public with an IPO is raising money. It sells on the stock exchange, so to speak. Retail investors can then invest by buying the company's shares. Investors who invest in IPOs in 2021 can make good profits, but heavy losses cannot be ruled out either.
Investors who invest in companies that are going public and are issuing their shares for the first time acquire a stake in the company concerned and thus have a say. The company distributes the say to a broad masses, as many private investors can purchase the shares. The company thus rules out that it could be affected by the right to have a say in its work. It would look different if an influential larger company were to acquire a large part of the shares.
The say of retail investors who buy shares in companies doing their initial public offerings is severely limited. These investors are invited to the Annual General Meeting and can benefit from price gains. If the company is successful, investors can receive a dividend, the amount of which is decided at the general meeting.
What is the difference between buying IPO stocks and buying stocks that have been traded for a long time?
Anyone who invests in the shares of companies that are just going public risks leaping into the unknown. A number of IPOs are planned for 2021. Some of these are well-known companies. However, it is not foreseeable how these companies will develop. Often, the shares of companies that have gone public have risen sharply within a short period of time. However, after an IPO it can take a long time for the share to rise in price. IPOs can sometimes turn out to be a flop. If you want to invest in IPOs in 2021, you should take a closer look at the company. One advantage of going public for investors may be the subscription profits. You can receive a subscription profit if you have ordered, i.e. subscribed, the share and it has been allocated to you. Shortly after the allocation, the first course is determined. If a share is oversubscribed because the demand was greater than the supply, you have made a subscription profit. You would miss this subscription profit if you waited to see how the stock performs.
Tech startups going public in 2021
Some tech startups have planned their IPOs for 2021. In Germany, 10 to 15 IPOs are expected in 2021. One of these companies from Germany is the used car platform Auto1. The company has hired investment banks BNP Paribas, Goldman Sachs and Citi to prepare for the IPO. In relevant financial circles, the company is valued at around 5 billion euros.
Other German companies planning IPOs in 2021 are
- About You as Otto's online fashion retailer, whose value is estimated at 3 billion euros
- Parship as a dating portal
- Check24 as an online comparison portal for financial services and insurance
- Daimler: The car company is to be split off from Mercedes. The company could sell a minority stake in its trucking business as early as the second half of 2021 if it chooses to spin off, Bloomberg reported. The transaction would require approval from Daimler shareholders, who could hold a special meeting by the end of September, the company said in a statement. The shares would be traded on the Frankfurt Stock Exchange. Both Mercedes-Benz and Daimler Truck would be supported by their own financial services and mobility service units.
It remains to be seen whether the companies will actually go public in 2021. The companies must obtain approval for an IPO from the stock exchange.
US IPOs that could be interesting in 2021
There are some interesting companies planning to go public in 2021. An IPO could be an interesting investment for private investors.
Robinhood is a trading app that benefits from current developments and currently has around 3 million users. The app is mainly used by young people who are investing in securities for the first time. The US-based company has not yet invested in Europe. It is difficult to assess that this company currently has a real hit.
Nextdoor is a social media service that was founded in 2008 and allows its users to organize neighborhood events. Users can sell things on the Nextdoor platform. In the US, this service covers about a quarter. It is now represented in eleven countries. This service has proven itself during the corona pandemic to organize neighborly help. Some analysts rate this service at $ 4 billion to $ 5 billion.
Bumble is another social media company when it comes to IPOs in 2021. The company offers a dating app that requires women to make their first contact. The BFF mode allows users of the service to search for friends. A network system is available with Bumble Bizz. Bumble has an intuitive user interface and is easy to use. Anyone who wants to contact via this service does not have to immediately publish a lot of personal information. Bumble currently has approximately 100 million users. The IPO is planned for spring 2021. The company is valued at between $ 6 billion and $ 8 billion.
Instacart is a startup where users can order purchases via an app. The purchases are made by independent buyers and delivered to customers' doorsteps. The demand for this service rose sharply during the corona pandemic. The company has a network of approximately 30,000 stores in the US and Canada. It has already raised $ 425 million in capital. The company is valued at $ 17.7 billion.
UiPath is a technology company that was founded in 2005 and specializes in robot-controlled process automation. The company's automation solutions have proven themselves during the corona pandemic, as they were able to help companies cope with digital transformation processes. The company is valued by experts at $ 15 million. Talks are already underway with various Wall Street banks to prepare for the IPO.
Stripe is an online payment service that offers its services in 25 countries. The specialty of this service lies in a self-learning system for fraud prevention. Customers can therefore rely on a high level of security. The need for such services increased sharply during the corona pandemic. If the company was originally valued at $ 22.5 billion, it could now be $ 36 billion.
ThoughtSpot was founded in 2012 and is a software developer for analysis software. Customers also include companies like Walmart and Apple. It is difficult for analysts to evaluate the company. The company is valued at $ 2 billion.
All of these companies have good prerequisites for going public. If they can continue to develop so well, the IPOs could actually take place in 2021.
Other interesting IPOs in 2021
It is not just in the USA that many companies are entering the trading floor this year. Various companies from Germany are also thinking of going public.
Mytheresa is a German luxury goods retailer. The company is preparing its IPO not in Germany, but in the USA. The company has filed its documents with the US Securities and Exchange Commission. The company is valued at between 0.82 and 1.23 billion euros.
The is planning an IPO on NASDAQ SAP subsidiary Qualtrics. This company offers software for market research and surveys. At the IPO, however, the company's shares are expected to trade at $ 20 to $ 24 apiece. The IPO is being prepared by JPMorgan and Morgan Stanley. The value of the IPO is given by Qualtrics at 100 million US dollars.
What other IPOs can be expected in 2021?
A number of other IPOs are planned for 2021:
- Arm Holding is a manufacturer of semiconductors based in the UK
- Arriva as a subsidiary of Deutsche Bahn
- ByteDance (Tik Tok) as an internet technology company based in the Chinese capital Beijing
- Coinbase as a crypto exchange based in San Francisco
- Deliveroo as a UK online delivery service
- Jackson as an insurance company
- Omonia Office as a provider of office properties
- On as a supplier of shoes
- Ruag as a Swiss technology group with a focus on aerospace and armaments
- Synlab as a company in the medical sector
- Vantage Towers as a telecommunications company.
In addition, other companies are planning to go public in 2021. It is not certain whether all of these companies will actually be able to carry out an IPO this year. The shares of all companies are not also available in Germany for an IPO.
Investing in an IPO - what you should consider
Once you have found out about the planned IPOs for 2021, you can invest in the shares of various companies in an IPO. There are a few things you should keep in mind so that your investment doesn't turn out to be a flop.
You should study the company carefully. It depends on the development in the past, the level of awareness, the industry, the competition and the value of the company. The company should have a solid base. A great advantage is having information about the company's sales and profits in the past.
The companies have various reasons for going public. The most important reason is in raising capital. An IPO can be an alternative to a bank loan. Know the reason the company is planning an IPO and what purpose it plans to use the money for.
Many companies planning IPOs advertise this in the media. In an IPO, they want to find as many investors as possible who will invest in the shares. You can already find out how great the interest is in the shares. However, it is difficult to find out whether the strong demand for the stocks is due to interesting capital demand or the media hype.
If an IPO is postponed, that can be a reason not to invest in an IPO and first wait to see how the shares develop. The company then does not yet have the right conditions for an IPO.
Conclusion: Many exciting IPOs planned for 2021
Many German and US companies are planning their IPOs in 2021. Check24, Parship and Auto1 are also among them. You should study the companies closely if you want to invest in the stocks of such companies on an IPO.
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