We might be living through “peak IPO.” Not in sheer listings, but in sheer appetite.
Since the start of the year, trendy market newcomers have appreciated love from Wall Street and Main Street traders alike; welcomed by massively oversubscribed IPOs, dramatic first-day pops, and some wildly different outcomes.
Among large listings, debuts from stablecoin issuer Circle Internet Group (CRCL) , defense contractor Karman Holdings KRMN, and hyperscaler CoreWeave (CRWV) have been epic, returning 287%, 145%, and 130% since their IPOs respectively.
But not all is up and to the right, certainly not after day one and definitely not for investors who didn’t get in at the IPO price. As the trajectory of some recent IPOs show, buying after the open can be quite damaging. Take design software Figma (FIG) , neobank Chime CHYM, and performance ad platform MNTN (MNTN) : they’re down 43%, 33%, and 28% from their first-day closing price respectively.
There is another option for IPO investors who want in at the IPO price, though. In fact, some brokerages are offering shares to customers in three big upcoming IPOs: buy now, pay later firm Klarna, crypto exchange Gemini Space Station, or blockchain lender Figure.
Klarna
Buy now, pay later firm Klarna was once crowned Europe’s most valuable startup, boasting a valuation of over $45 billion; a relic of the zero-interest rate mania gone by. However, the company is seeking redemption on Wall Street this coming week, even if it comes in the form of a slimmed-up $14 billion valuation. With pricing set between $35 and $37 per share, the company is looking to raise up to $1.46 billion. A considerable discount to its one-time price might make the company more attractive as it faces pressures to turn a profit, as well as competitive and regulatory headwinds which are weighing on their growth trajectory.
Gemini Space Station
Featured on our “three crypto IPOs” list in mid-August, Gemini is one of the largest U.S-based crypto exchanges. It made over half of its revenue from trading, making it a beneficiary of the recent boom in crypto trading and valuations. Riding that boom, the company aims to raise up to $316.7 million at a $2.2 billion valuation in its upcoming IPO, with a price range set between $17 and $19 per share. However, its long-term price will be closely tied to crypto valuations, meaning that a decline in heavyweights like Bitcoin or Ethereum could result in big losses for investors.
Figure Technologies
Blockchain lender Figure Technologies might not be a household name, but the company has quietly become America’s largest non-bank HELOC lender. In other words, it falls at the corner of a few different trades drawing love from investors: blockchain, private credit, and fintech. The marketplace hopes to raise up to $526 million in its IPO, seeking a $4.1 billon valuation. That would put pricing between $20 and $22 per share. Already profitable, the company’s 22% year-over-year revenue growth might catch investors’ eyes.
IPO Access
Investors have the opportunity to invest in select IPOs by submitting an Indication of Interest (IOI) on a brokerage like Fidelity, Robinhood HOOD or SoFi Technologies SOFI, among others.
These are basically an application to buy up to a certain number of shares at the IPO price. These orders are then filled, based on demand, on the day of the listing. This means that you could request 10 shares and only get 1; alternatively, you could get all of them.
Submitting an IOI does not guarantee that you will get shares of the IPO, but if you do, it means you’ll get the shares at the agreed upon price. This could result in gains for investors who get allocated. Alternatively, it could mean losing money if the IPO does not go well.
Recently, IPOs have been going well. However, investors should consider a company’s trajectory and valuations when deciding to invest, how much to request, or when they should sell their investment.
In addition, investors should review rules on “flipping”, as selling a stock within a period of time after an IPO could preclude you from future IPO allocations.
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