Reddit
is
looking
to
list
on
the
New
York
Stock
Exchange
with
the
ticker
RDDT
next
week.
This
initial
public
offering
(IPO)
is
the
first
major
social
media
debut
since
Pinterest (PINS)
in
2019.
However,
it
comes
after
a
series
of
buzzy
listings
last
Autumn
–
see
Arm
Holdings (ARM),
Instacart
(Maplebear) (CART),
Klaviyo (KVYO),
and
Birkenstock (BIRK).
All
have
since
failed
to
ignite
the
IPO
market.
As
such,
Reddit
will
be
a
test
case
after
the
IPO
dearth,
according
to
Morningstar
market
strategist
Michael
Field:
“A
successful
IPO
could
tempt
others
to
market.
But
it’s
tough
to
say
if
it
will
be
successful
and
if
the
appetite
is
there.
On
the
one
hand,
equity
markets
are
at
all-time
highs,
but
on
the
other
hand
investors
are
cautious
about
IPOs,”
he
says.
According
to
Morningstar
PitchBook
data,
there
are
several
other
companies
that
look
like
candidates
for
listing
this
year.
The
company
polled
its
emerging
technology
research
team,
collecting
the
20
most
likely
venture
capital-backed
IPO
prospects
over
the
next
year.
Why
is
Reddit
Listing?
Owner
of
the
eponymous
social
media
brand,
Reddit
has
created
stock
market
buzz
before,
largely
due
to
the
role
the
WallStreetBets
community
played
in
the
meme
stock
frenzy
of
2021,
in
which
stocks
like
GameStop
(GME)
and
AMC
(AMC)
were
artificially
inflated
by
users
of
its
platform.
With
this
planned
float,
loyal
Redditors
are
likely
to
benefit
too,
as
the
company
is
planning
to
reserve
some
shares
at
listing
price
for
them.
Financials-wise,
the
company’s
cash
flows
are
improving,
but
it
is
yet
to
see
an
annual
profit.
In
the
2023
calendar
year,
it
reported
a
net
loss
of
$90.8
million
(on
revenue
of
$804
million).
As
such,
a
target
valuation
$6.4
billion
is
significantly
less
than
the
$10
billion
valuation
it
posted
in
2021,
according
to
PitchBook.
Boosting
it
will
require
plans
to
expand
a
nascent
advertising
business
and
diversify
its
revenue
sources
to
bear
fruit.
This
plan
involves
licencing
its
vast
pool
of
user
data
to
third
parties
for
various
purposes,
including
research
and
the
training
of
artificial
intelligence
models.
Analysts
say
this
could
draw
attention
from
investors,
especially
given
the
connection
to
the
AI
theme,
which
has
propelled
markets
higher
this
year.
Morningstar’s
Field
notes,
however,
that
while
the
theme
was
a
success
for
Arm,
“AI
is
a
different
fish
altogether,
and
Reddit
doesn’t
have
the
backing
that
AI
does.”
Who
will
IPO
Next?
Morningstar
PitchBook
analysts
have
looked
for
venture-backed
startups
with
compelling
IPO
characteristics,
such
as
strong
revenue
growth
and
margin
potential,
durable
businesses
models,
capable
management
teams
with
successful
track
records,
and/or
product
and
technology
offerings
with
realistic
chances
of
disruption
and
growth.
Four
of
these
are
European.
Ish.
IPO
Candidate
1:
Klarna
•
Revenue:
$549.5
million
in
Q3
2023,
$2.1
billion
last
12
months;
•
Public
Competitors:
Affirm
(AFRM),
PayPal
(PYPL),
Sezzle
(SEZL);
• IPO
Probability:
92%.
Klarna
is
a
leading
buy-now-pay-later
(BNPL)
company
that
operates
in
the
US,
Europe,
and
Australia.
The
company’s
core
product
offerings
are
interest-free
short-term
loans
that
allow
consumers
to
split
their
purchases
into
multiple
installments,
but
it
also
offers
longer-term
loans
with
interest,
debit
cards,
an
AI-powered
shopping
app,
and
B2B
solutions
for
merchants.
Klarna
primarily
derives
revenues
from
merchant
fees,
interest
income,
interchange,
and
affiliate
marketing.
The
IPO
Rationale
Klarna
is
a
market
leader
in
the
BNPL
space
and
has
continued
to
expand
its
share.
The
company
currently
recognises
150
million
global
active
users
and
two
million
daily
transactions.
Affirm,
Klarna’s
closest
US
competitor,
has
just
17.6
million
of
the
former.
In
existence
for
nearly
two
decades,
the
company
now
boasts
many
notable
investors
on
its
cap
table.
However,
this
also
creates
complexities
in
Klarna’s
capital
structure.
An
IPO
would
simplify
this
by
converting
preferred
shares
into
common
shares.
Furthermore,
Klarna’s
chief
executive
has
recently
made
public
comments
hinting
at
a
near-term
IPO.
Klarna
has
been
steadily
improving
its
financials.
In
Q4
2023,
Klarna
grew
revenues
26.0%
YoY
to
$704.2
million
and
improved
its
net
loss
by
76.1%
YoY
to
$43.5
million.
The
company
also
reduced
credit
losses
by
32.3%
year-on-year
to
$373.3
million,
and
saw
a
credit
loss
rate
of
0.4%
for
FY2023.
In
gearing
up
for
a
potential
IPO,
Klarna
has
also
explored
diversification
of
its
revenue
streams
through
its
debit
card,
affiliate
marketing
income,
and
recently
launched
subscription
service.
By
Rudy
Yang,
senior
analyst,
emerging
technology,
PitchBook
Data
IPO
Candidate
2:
Northvolt
•
Revenue:
$179.3
million
in
2022;
•
Public
Competitors:
BYD
(002594),
Panasonic
(6752);
• IPO
Probability:
97%.
Northvolt
produces
batteries
with
a
low
carbon
footprint
for
mobility
and
stationary
energy
storage
applications.
Founded
by
former
Tesla
employees,
the
company
focuses
on
lithium-ion
battery
chemistry
but
also
develops
and
produces
batteries
with
sodium-ion
chemistry
and
develops
battery
recycling
technology.
Initially
focusing
on
European
markets,
Northvolt
is
expanding
production
in
North
America.
The
IPO
Rationale
Having
delivered
its
first
commercial
batteries
in
2022,
Northvolt
is
rapidly
scaling
up
its
global
manufacturing
capacity.
The
company’s
“Ett”
gigafactory
in
Sweden
began
construction
in
2019,
and
capacity
is
expanding
for
both
cell
production
and
recycling.
In
tandem,
Northvolt
is
establishing
its
first
gigafactory
in
North
America,
with
the
announcement
of
“Northvolt
Six”
in
Montreal,
which
is
expected
to
begin
commercial
production
in
2026.
In
total,
the
company
has
two
operational
production
facilities
and
a
further
four
in
construction
or
planning.
A
public
listing
would
likely
improve
Northvolt’s
ability
to
raise
both
equity
and
debt,
which
are
essential
in
a
capital-intensive
industry
such
as
battery
manufacture.
So
far,
it
has
raised
$14.3
billion
including
grants
and
debt
financing.
Northvolt
sits
in
a
relatively
unique
space
in
European
markets
due
to
its
size
and
the
scarcity
of
lithium-ion
and
sodium-ion
battery
producers
in
Europe.
Indeed,
the
company’s
primary
production
facility
in
Sweden
sits
in
the
north
of
the
country,
close
to
significant
hydropower
infrastructure,
which
provides
relatively
cheap
low-carbon
electricity.
Many
of
its
competitors
are
based
in
East
Asia,
which
is
currently
exposed
to
increased
geopolitical
risk.
European
buyers
have
historically
had
little
choice
over
where
they
buy
li-ion
batteries,
so
Northvolt
looks
poised
to
benefit.
Financially,
Northvolt’s
revenue
has
been
growing
steadily
over
the
last
two
years,
although
high
costs
from
scaling
manufacturing
capacity
has
resulted
in
negative
EBIT
margins.
The
company
is
now
targeting
fast-growing
applications
in
both
stationary
energy
storage
and
the
mobility
space.
Current
investors
include
large
European
automotive
companies
such
as
Volvo
and
Volkswagen,
while
Northvolt
customers
include
BMW,
Fluence,
Scania,
Volkswagen,
Volvo
Cars,
and
Polestar.
By
John
MacDonagh,
senior
analyst,
emerging
technology,
PitchBook
Data
IPO
Candidate
3:
Getir
•
Revenue:
$460.5
million
in
2022;
•
Public
Competitors:
Delivery
Hero
(DHER),
DoorDash
(DASH),
Deliveroo
(ROO);
• IPO
Probability:
91%.
Getir
is
an
on-demand
delivery
service
that
specialises
in
ultra-fast
grocery
delivery
and
convenience
retail.
Through
its
mobile
app,
Getir
allows
customers
to
browse
a
wide
selection
of
grocery
items,
household
essentials,
and
other
convenience
products
and
have
them
delivered
in
minutes.
Getir’s
unique
selling
proposition
lies
in
its
promise
of
rapid
delivery,
typically
within
10
to
15
minutes,
making
it
a
convenient
option
for
consumers
seeking
immediate
access
to
everyday
essentials.
The
IPO
Rationale
Getir
has
raised
more
than
$2.3
billion
in
VC
funding.
The
company’s
recent
down-round
lowered
its
valuation
from
$11.8
billion
to
$2.5
billion,
potentially
indicating
leadership’s
acknowledgment
of
the
new
economic
paradigm
and
the
company’s
desire
to
reposition
itself
for
an
attractive
public
listing.
Well-known
venture
capital
firms,
including
Tiger
Capital,
Goodwater
Capital,
Sofina,
and
Sequoia,
have
invested
in
its
growth.
Despite
being
a
relatively
young
company
(it
was
founded
in
Instanbul
in
2015),
Getir
has
expanded
aggressively.
It
operates
in
populous
European
cities
such
as
London,
Berlin,
Amsterdam,
and
Paris,
in
addition
to
28
provinces
in
Turkey.
It
has
also
acquired
several
leading
companies,
including
FreshDirect,
Gorillas,
and
Blok,
further
broadening
its
reach.
The
increasing
consumer
demand
for
convenience
and
on-demand
services,
especially
in
the
wake
of
the
covid
pandemic,
also
creates
a
favourable
market
environment
for
Getir’s
grocery
delivery
business.
As
consumer
preferences
continue
to
shift
toward
online
shopping
and
instant
gratification,
Getir
is
well-positioned
to
capitalise.
By
Alex
Frederick,
senior
analyst,
emerging
technology,
PitchBook
Data
IPO
Candidate
4:
Stripe
•
Revenue:
$3.2
billion
in
2022,
$2.6
billion
in
2021;
•
Public
Competitors:
Adyen
(ADYEN);
• IPO
Probability:
96%.
Stripe
started
as
a
developer-first
merchant
acquirer
for
e-commerce
and
has
since
added
multiple
financial
products
including
fraud
detection
and
prevention,
billing,
payments
terminals,
invoicing,
carbon
removal,
sales/VAT
tax
tools,
and
more.
IPO
Rationale
Stripe
is
14
years
old,
has
raised
$9.1
billion,
and
likely
needs
liquidity
for
employees
and
investors.
Its
revenue
base
is
large,
and
it
has
a
strong
growth
profile
that
is
similar
to
those
of
other
public
companies.
Key
questions
that
will
determine
the
timing
of
its
IPO
include
the
extent
to
which
large
investors,
including
employees,
push
Stripe
to
go
public.
Most
VCs
are
notoriously
hands-off
when
it
comes
to
pushing
for
a
listing,
depending
on
whether
the
founders
and
their
VCs
think
now
is
the
right
time
to
subject
Stripe
to
the
scrutiny
of
public
markets.
This
often
shifts
operational
focus
to
margin
expansion.
Secondary
trading
data
indicates
Stripe’s
valuation
has
improved
more
than
$70
billion
from
$50.0
billion
in
its
prior
raise,
but
is
still
below
its
peak
valuation
of
$90.0
billion.
(We
note
secondary
trades
have
valued
the
company
much
higher).
The
increase
suggests
strong
revenue
growth
and
a
positive
margin
trajectory.
Investors
in
Stripe’s
latest
$6.9
billion
round
would
make
a
40%
return
at
a
$70.0
billion
valuation.
Like
Instacart,
Stripe’s
cap
table
has
plenty
of
investors
who
have
invested
in
both
early-
and
late-stage
rounds.
It
is
probably
in-the-money
on
its
position.
As
a
result,
there
are
likely
fewer
big
holders
who
are
underwater
and
pushing
to
wait
for
a
better
valuation.
By
James
Ulan,
lead
analyst,
emerging
technology,
PitchBook
Data
