3 Tech Majors Likely To IPO In 2016
2015 wasn’t a great year for tech IPOs. A report from Ernst & Young (December 2015) states that tech IPOs on U.S. exchanges were 47 percent lower in 2015 by deal number, and 27 percent lower by proceeds (excluding Alibaba) compared to 2014, raising only $8.1 billion through IPOs, compared with an estimated $20 billion through private offerings in the first six months alone.
CB Insights, which tracks private-market financing, says that 190 tech companies it tracks raised a total of $25 billion this year from venture capital firms and other investors. An abundance of funding in the private markets, and a volatile stock market had made closing IPOs challenging this year, and many companies that chose not to take the IPO route.
Investment bankers are however expecting 2016 to be somewhat exciting as far as tech IPOs matter. Here are some tech companies that can be the future leaders of the IPO market in 2016:
Uber: Launched back in 2010, the app-based transportation company headquartered in San Francisco, California, operates in roughly 270 cities and more than 60 countries worldwide today. The company uses a smartphone app to receive ride requests, and then sends out these requests to their drivers who transport the customers to their final destinations.
While Uber has seen great success, it has run into some roadblocks as of late. Uber has been in and out of the news thanks to legal and publicity issues in a variety of countries for a number of issues.
Because of increased regulatory concerns and lack of driver background checks, Uber has been banned in The Netherlands and in parts of Thailand, India, and China. Scrutiny has increased in Vietnam, Singapore, and Indonesia due to these same issues.
Amid all the controversies, Uber has reportedly generated roughly $2 billion in net revenue at the end of this year and investors are eagerly awaiting an Uber IPO. Many believed that the company would go public in 2016, even though Uber has stayed silent on the subject.
According to investment research firm Zacks Research, An upcoming IPO for Uber would be massive, as the company is currently valued at an amazing $51 billion after a total of seven rounds of funding worth $7.4 billion since its launch. And thanks to Uber’s structure—a unique combination of transportation company, mobile Internet company, and real world engineering—the company has been touted as one of the best future IPO candidates.
Airbnb: The room rental service, is worth an estimated $25.5 billion. Founded in 2007 by Brian Chesky and Joe Gebbia, Airbnb is an app and website that connects people seeking lodging with renters who have listed their personal houses, apartments, guest rooms, etc on either platform. Currently, the company boasts over 1.5 million listings in 34,000 cities and more than 190 countries, as well as over 40 million total guests. It also has an international presence in cities like Paris, London, Sao Paolo, Sydney, and many others.
Since 2014, rumors have been swirling of Airbnb’s inevitable initial public offering, even though CEO and co-founder Chesky said no to an IPO in 2014. In an interview with the Wall Street Journal, Chesky said that “we will do it at a time when it benefits the company, when we have a good reason.”
Their alleged valuation, however, as well as being a recognized name in the increasingly popular “sharing economy,” is helping raise buzz. Their popularity among venture capitalists is helping increase hype, too.
Airbnb is a company for the digital age, and investors and venture capitalists have taken notice. The company has already received a total of $2.3 billion in eight rounds of funding from firms like Andressen Horowitz, Fidelity Investments, and T. Rowe Price, among many others, say Zack researchers.
Despite competing companies and regulatory issues, Airbnb has the potential to be one of the hottest upcoming IPOs. With millions of dollars in investments already, a thriving rebranding, and its rising popularity among travelers, Airbnb’s IPO is one to watch out for.
Snapchat: Started as a class project for Stanford University by Evan Spiegel (now CEO), Reggie Brown, and Bobby Murphy, Snapchat has grown to be one of most popular messaging and social media apps. It allows users to take photos, record videos, add text and drawings, and send them to a controlled list of recipients.
It was officially launched in 2012, and is available for both iOS and Android users, Snapchat has reached a valuation of about $16 billion, putting them in the elite clique of tech startups.
Back in 2013, the company caught the attention of tech giants Facebook and Alphabet (formerly known as Google). The companies offered to acquire Snapchat for $3 billion and $4 billion, respectively. In a bold but smart move, Snapchat turned down both offers. This May, Speigel further triggered investors’ interest when he told Re/code at its annual conference: “We need to IPO. We have a plan to do that.”
Snapchat has also recently made high-profile hires that could be viewed as IPO preparation. Late last year, the Los Angeles-based company hired Imran Khan, the Credit Suisse banker who led Alibaba’s IPO earlier in 2014.
Experts believe, Snapchat is an ephemeral messaging system, social network, community, and ad platform. Its unique, yet increasingly popular application method is a major contributing factor to its success.
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