The tech IPO market is widely expected to turn around in 2017, if for no other reason than that it is hard to imagine the market performing any worse than 2016. MarketWatch notes that that 2016 saw the lowest number of IPO deals since 2009 and raised the lowest level of proceeds since 2003.
Tech companies have been content to raise cash through private investors especially given global economic turmoil. But now many of those investors are expecting a return on their investment, which will spur tech companies to go public to raise additional funds. Some estimates predict that there will be 30 to 50 tech start-ups in the coming year.
But which start-ups or unicorns will have the biggest impact on 2017? Here are five possible IPOs which every investor should pay the closest attention to.
Snap
This is the obvious one. Snap, most famous for their social media app Snapchat, is reportedly working towards an IPO in early 2017 which could see the company valued from $20 to $25 billion. Snap has seen its revenue surge this year, its new Snap spectacles are attracting buzz, and some more optimistic analysts have compared Snap to Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) in terms of their technological impact.
But while investors should pay attention to Snap, that is not saying that Snap is an automatic buy. Snap is not profitable and there are legitimate questions about its long-term viability. Snap is the cool toy for young individuals now. But will it be able to use that market to raise money through advertising, or will those young kids just leave for the next cool social media app if Snap ratchets up the ads?
Despite those concerns, there is no doubt that Snap is one of the most important IPOs of 2017. If it debuts early in the year and is successful, that will encourage other tech IPOs to go public.
Qualtrics
New York research firm CB Insights released a report about a week ago which forecast that the tech IPO market will pick up in 2017. It also named five companies which they viewed as their strongest IPO prospects. Surprisingly, CB Insights did not pick well-known upcoming IPOs like Snap, but instead named Qualtrics and a few other more obscure companies. Qualtrics has been discussing an IPO since at least 2015 and there is a lot to like about this firm’s prospects. It has grown steadily as a corporate data analysis and is used by many major corporations. It is valued at over $1 billion, is cash-flow positive, and raised $150 million in its latest round of funding. While it may not be as big a name as other companies on this list, a successful Qualtrics IPO will show that public success is not just limited to the most well-known companies.
Blue Apron
CB Insights also listed Blue Apron as another solid IPO, but the meal delivery company delayed plans for an IPO last week as it worked to strengthen its financials. It still raised more than $800 million in revenue over this past year. Blue Apron is one of the leaders in a rising industry where companies deliver fresh, measured ingredients to customers who can more easily cook for themselves.
Given how few Americans have actually tried meal delivery services like Blue Apron or competitor Match Group (NASDAQ:MTCH) (which went public in November 2015 and has been successful since), this is an industry with good growth potential.
Vice Media
Vice has shown that investigative journalism is not dead, as it has managed to attract millennials with vivid stories that detail the lives of citizens in unique and often tough circumstances. In a mid-December interview with Variety, Vice CEO Shane Smith said that Vice “is taking a hard look at going public” and that “now is the time to do it.”
Vice is currently valued at more than $4 billion and has plans to expand into Africa and Asia. It is backed by Fox News and Disney, two companies which have compelled Vice to take a look at its books to prepare for an IPO, and its attractiveness with millennials is a plus.
Uber
Investors have been sitting around waiting for Uber to go public for years. But there are some indications that 2017 could finally be the year that this business idea will finally go public. As noted above, many private companies are facing pressure from past investors to go public so those investors can reap a profit. Uber faces this pressure like no other company because it has raised more from said investors and still faces massive losses. A good 2017 tech IPO market would be the perfect opportunity to strike.
Given the controversies which have always surrounded Uber as well as its lack of profitability, some investors may wonder whether Uber really would be that great an investment. But there is absolutely no doubt that an Uber IPO would be huge and the company should be watched throughout 2017 for both good and bad news.