7 Hot IPOs To Watch For In 2021 Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Our articles, interactive tools, and hypothetical examples contain information to help you conduct research but are not intended to serve as investment advice, and we cannot guarantee that this information is applicable or accurate to your personal circumstances. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Editorial disclosure
All reviews are prepared by our staff. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication. SHARE: Xinhua News Agency/Getty Images January 20, 2021 Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. A number of hot IPOs hit the market last year, including such highly anticipated names as Airbnb, Snowflake, DoorDash, Palantir and more, as companies raced to take advantage of a resilient stock market. And while this year’s crop of IPOs may not quite have the level of name recognition as the 2020 class, there’s still a highly anticipated list of companies expected to go public during this time. And another hot area of the market in 2021 will be SPACs, a special class of companies whose goal is to take over a private company, provide it funding and ultimately make it publicly traded. One of 2020’s brightest IPOs was DraftKings, which went public using a SPAC. Hot IPOs to hit the market soon
More than 450 new companies raised more than $167 billion in 2020, blasting through the prior record of nearly $108 billion at the height of the dotcom bubble in 1999, according to Dealogic, a market and data analytics firm. “I think you’re going to see that there’s pent-up demand, that IPOs increase in 2021,” says Matthew Bruderman, CEO of Bruderman Asset Management in New York City. Low interest rates and robust investor appetite for risk make it a good time for companies to market themselves. “I think you’re going to see more SPAC IPOs and tech IPOs,” says Bruderman, who expects a lot of quality IPOs, but sees many weaker candidates looking to take advantage of the wave. The last few months have seen valuations on new issues skyrocket in the weeks after the IPO. This “irrational exuberance” is giving some investors pause. They’re worried that it’s a repeat of the dotcom bubble and bust. But others have been much less cautious in the market’s run-up. “Every millennial with a Robinhood account thinks they’re the greatest investor in history,” says Kristian Finfrock, president of Retirement Income Strategies, in the Madison, Wisconsin area. “The markets have been on a roll for 11 years, even with the flash crash of March [2020].” With the market’s and the furor over IPOs, he often hears clients asking, “Are these real companies?” He says clients are wondering if they’re “investing in a company where we’re buying the future or is it going to crash and burn?” Some of 2021’s hottest IPOs are competitively well-positioned, and many investors will be buying first and reading the prospectus later, if at all. Here are some of the most highly anticipated IPOs that are likely to be on the way this year: 1 Bumble
Bumble is a relatively newer dating and social networking app that’s grown extremely popular. While it has some fierce competition in the likes of Tinder and other top dating services, it notched more than 100 million users in 2020. Still, with more and more people meeting initially through apps rather than through traditional means these days, Bumble could be a key player in the space. 2 Roblox
Roblox is an online game as well as a game-creation platform, allowing users to develop their own games. It’s been a huge hit with kids, with more than half of its users being younger than age 13. Overall the company boasts more than 30 million daily active users around the world. One wrinkle: the company plans to rather than a conventional underwritten IPO. 3 Coinbase
If you’ve done anything with , then you’re likely familiar with Coinbase, an online exchange for digital currencies and the largest in the U.S. As the interest in crypto assets continues to heat up and trading increases, Coinbase seems like a winner, regardless of which digital currencies become dominant. 4 Robinhood
While other brokers have mobile apps, is the name people think of when you say “stock trading app.” It’s grown its client base rapidly over the last few years — especially in 2020 amid the pandemic — with its model of no commissions and a slick, gamified app that makes it easy to trade. Recent missteps regarding security and order routing may have tarnished the broker’s reputation a bit, and its gamification of trading has created additional negative publicity. But given its rapid growth, those recent bumps in the road likely won’t hurt the opening valuation too much. 5 Instacart
This grocery-delivery app was eyeing a 2020 IPO but ultimately didn’t get it done, so it’s likely to ring the bell in 2021. Instacart takes a consumer’s order, then assigns a personal shopper to pick out the items and deliver them to your residence, allowing consumers to avoid the hassle of shopping and, during the pandemic, the associated risks of venturing out. 6 Stripe
Stripe is a digital payments company that creates software for powering e-commerce, what it calls “economic infrastructure for the internet.” It already counts some big tech players as customers, including Amazon, Salesforce and Instacart. If the IPO happens, the fintech would likely be one of the year’s largest debuts, if not the largest. 7 Nextdoor
Nextdoor is a social network that allows you to connect with your neighborhood, organizing events and alerting your neighbors to things going on in the vicinity. It might be on the smaller end of 2021’s IPOs with a potential valuation of a few billion dollars, but the market has shown a robust appetite for social network IPOs. SPAC IPOs are hitting records
While the “household name” IPOs garner a lot of the press, it’s important not to overlook what’s likely to be one of the biggest trends this year: SPAC IPOs. SPACs saw a record year in 2020, scoring nearly half of the year’s IPO proceeds, according to Dealogic, and the party is still raging in 2021. Without SPACs, 2020 was merely an outstanding year for , not a record. SPACs, or special purpose acquisition companies, are formed for the purpose of funding a private company and getting it into the stock market. They typically raise hundreds of millions of dollars from investors, typically at $10 per share, and then look for a private company that they can take public. They usually have a couple years to sign a deal, or they’re forced to return the cash to investors. SPACs usually specify the industries they’re scouting for a deal, with electric vehicle companies among the hottest sectors around, piggybacking off investors’ enthusiasm for leaders like . The SPAC effectively buys a portion of the private company with its cash, and since the SPAC is already publicly traded, the private company becomes a publicly traded company, too. Why are SPACs suddenly so popular
A recent Goldman Sachs report suggests that SPAC deals raised in 2020 alone could lead to around $300 billion in aggregate takeovers over the next two years, if SPACs maintained their record of contributing about 20 percent of the private company’s capital. “The SPAC market is growing by leaps and bounds,” says David Gallers, managing partner and co-founder of Wealthspring Capital, a New York-based investment advisory firm. “And the SPAC market is off to a huge start in 2021.” SPACs have become increasingly popular for a number of reasons. One of the biggest is that SPAC sponsors can earn a pile of money on them, even if they take a “dog of a company” public. While outside investors put up virtually all the money for the SPAC, the SPAC’s sponsors usually take 20 percent of these shares as a bonus. If they ink a deal, they’ll keep the shares. If not, the SPAC is dissolved and investors receive their money back, typically $10 per share. Plus, by running a publicly traded SPAC, a sponsor has more access to capital than going through private investors, and can avoid dealing with more powerful investors who can push down deal fees. They also get equity in any deal through their bonus stake in the company. Investors may like SPACs for a few reasons. They have limited downside, since before a deal is finalized, they can demand their $10 per share back. So they get a “free look” at a deal. If the SPAC has a capable sponsor, investors may be able to own an attractive private company. If they don’t like it, they can sell the stock (maybe above $10) or request their money back. And private companies may like the structure, because it’s much easier to go public via a SPAC than the more rigorous process of traditional underwriting and heavier SEC regulations, which limit the kind of projections that a traditional IPO can offer to investors. But it’s not just these incentives that have contributed to the SPAC boom. With low interest rates, SPACs offer an alternative: potential upside with limited risk. Meanwhile, capital is sloshing around in the market and private equity investors have few good companies to buy. “I don’t think SPACs are going away, because they’re the new private equity,” says Bruderman, pointing to private equity’s role of cycling companies through the public and private markets. “There’s a broader acceptance of SPACs, and they’re going to be here to stay,” says Gallers. “SPACs have become an attractive and accepted vehicle for companies to enter the public markets.” Bottom line
There’s no question that IPOs have caught the market’s fancy, and investors are pushing newly public stocks quickly higher, a move that looks speculative. So it’s more important than ever to stick to good investing fundamentals, says Finfrock, who suggests avoiding IPOs generally. Still Finfrock knows that investors may get the itch to invest in a hot IPO. So he recommends investors open a separate, small “home-run account” where they can invest in IPOs and limit total losses. And if you’re investing in IPOs, he says you should be prepared to lose all of your money: “It’s exciting to get rich quickly, but almost always [these] get-rich-quick schemes don’t work.” Learn more
SHARE: Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles