Best IPOs to Invest in May 2024

With the S&P 500 just hitting another record high in May and Federal Reserve interest rate cuts still in the cards, initial public offerings (IPOs) may be back in vogue after a couple of sluggish years. After a record 1,035 IPOs in 2021, the total fell to 181 in 2022 and 174 in 2023, as poor performance by some stocks following their IPOs and high interest rates discouraged companies from selling shares to the public.

There were several well-known companies, such as Instacart, Birkenstock and ARM, whose shares slumped shortly after their IPOs in 2023.

So far this year, we have had 69 IPOs according to research firm Stock Analysis, putting us on pace for 192. The driver for the rebound has been a rising US stock market, which makes it more likely that an IPO will reach its target. IPO valuations have also risen as a result.

Read on to discover 10 upcoming IPOs to consider taking part in.

Best IPOs to Watch in 2024

Here’s a quick overview of the most-awaited IPOs this year:

  1. Altera: The spinoff of Intel’s programmable chip unit, Altera, makes field-programmable gate arrays (FGPAs), used for medicine, data centers and by defense systems.
  2. DataBricks: The US data architecture and AI company is ready to do an IPO, but it is doing so well financially, there’s no hurry. The company just launched DRBX, its large language model for generative AI.
  3. Klarna: The Swedish fintech company, known for its payments service, has more than 150 million active users across more than 550,000 merchants in 45 countries, and processes 2.5 million transactions a day.
  4. Discord: The US tech company operates a popular instant-messaging app used by gamers and online communities. It turned down a $12 million offer in 2021 to be bought out by Microsoft.
  5. Turo: The US peer-to-peer car-sharing platform is seen as an alternative to car rental services. It allows car owners to rent their vehicles online at a lower cost than car rental agencies.
  6. Navan: Founded in 2015 as TripActions, Navan has reportedly been working with Goldman Sachs to prepare for an IPO. Navan is known for its AI-powered travel expense management app used for corporate travel.
  7. Key Mining: The US mining company, founded in 2020, has two exploration-stage projects in Chile. Its IPO is estimated to be May 17 and the company is expected to list on the Nasdaq under the symbol KMCM.
  8. Shein: The Chinese fast-fashion online retailer is looking to have its IPO on the London Stock Exchange (LSE) in May. It has used TikTok and other social media to become one of the most recognized fashion brands in the world.
  9. Stripe: The online payments platform, which has headquarters in San Francisco and Dublin, isn’t in any hurry to have an IPO after it did a private stock sale that raised $694 million. However, an IPO is still possible next year.
  10. SKIMS: The US shapewear clothing company, co-founded in 2018 by Kim Kardashian and Swedish entrepreneurs Jens and Emma Grede, is planning an IPO sometime this year, according to Bloomberg.

A Closer Look at the Top IPOs to Invest in

Now, let’s take a look at the best upcoming IPOs in more detail:

1. Altera – New Company That Already Has a Head Start

Chipmaker Intel is planning to sell shares to the public in its programmable chip unit PSG in an initial public offering by 2026. The business makes field-programmable gate arrays (FPGAs) that are chips that can be programmed after manufacturing to suit various needs. The business Intel acquired in 2015 for $16.7 billion has been spun off and operating as standalone company since January under its original name Altera.

The new company has an IPO valuation of $150 billion, putting it ahead of most upcoming public offerings.  It was earned for $342 million in revenue and had an operating loss of $39 million in the first quarter. It also has its own CEO, Sandra Rivera, who was formerly Intel’s general manager of its Data Center and AI Group.

The new company should have some built-in security with Intel planning to remain its majority stockholder. The IPO would give Intel some much needed funds for its plans to be more competitive in the industry and would allow Altera to expand its business.

2. DataBricks – Open-Source AI Model Could Unlock Profit Growth

The San Francisco company is the first lakehouse platform in the cloud, a data management system that combines the strengths of two data storage concepts: data lakes and data warehouses. A data lake is a large, flexible storage repository for all types of data regardless of their structure, while a data warehouse is more structured, specifically designed to analyze large datasets.

Its newest large language model (LLM), called DBRX, allows businesses to use their own proprietary data to create custom AI applications. The software is open-sourced and while companies can use it for free, DataBricks charges pay-as-you-go fees for its tools and the usage of its cloud platform.

The 11-year-old company has been open about its financials, which should make it ready to go to an initial public offering at any time. In fiscal 2023, which ended Jan. 31, it reported $1.6 billion in revenue, up more than 50% from the previous year. The company has been valued at $43 billion.

3. Klarna – Fintech’s IPO Could Come in the Third Quarter

The largest market for the Swedish fintech company Klarna is the US, where it has more than 37 million customers. It uses AI to provide alternative payment methods and a buy-now, pay-later (BNPL) alternative to traditional credit cards. The fintech charges no interest, saying that its checks ensure that 99% of the money it lends is repaid.

It recently partnered with Uber to use Klarna’s payment systems across Uber’s ride-sharing and delivery platforms, Uber and Uber Eats and the deal could make its IPO more enticing to investors.

Klarna said it made revenue of 23.5 billion ($2.17 billion) Swedish kronor (SEK) in 2023, up 22%, and a net loss of SEK 2.54 billion, which narrowed 76% from 2022. The company in talks with US banks to finance a $20 billion IPO as early as the third quarter, according to reports.

4. Navan – Riding Along the Business Travel Comeback

Navan, which runs an AI-powered travel expense management app used for corporate travel, just hired Amy Butte as the company’s audit committee chair. It’s a telling move because Butte helped transition the New York Stock Exchange (NYSE: NYSE) and the global travel supply distribution service Sabre Corporation (NASDAQ: SABR) through their IPOs.

Navan, which was estimated to be worth $9.2 billion in 2022, and it reportedly hired Goldman Sachs, one of the most active investment banks in the IPO market, to prepare for a public offering this year, but now this looks more likely to happen in 2025.

Navan said its revenue increased five-fold from 2021 to 2023 as corporations picked up business travel as the pandemic ebbed. Last year, the company added Ava, an automated virtual assistant that it says has been well received. Its Navan Rewards platform rewards business travelers for saving money and can be redeemed for upgrades or Amazon gift cards.

Navan’s more than 9,000 customers include well-known names like Netflix, Adobe, Lyft, Shopify, Unilever, and Rivian. According to a report by Fortune Business Insights, the global travel and expense management software market is expected to grow from $3.6 billion in 2024 to $9.94 billion by 2032, at a compound annual growth rate (CAGR) of 13.5%.

5. Key Mining – High-Risk, High-Reward Mining Operation

Key Mining is looking to raise $10 million by offering 4.4 million shares at a price range between $2 and $3. At the midpoint of that range, it would have a market capitalization of $61 million. The company has no revenue yet and needs the IPO to develop the mining operations it owns.

Key Mining’s two main projects are in the Atacama Region of Chile. The Cerro Blanco mine is exploring for rutile, from which titanium dioxide is processed and used for paint pigments, coatings and even sunscreen. The area is known for having the 10th largest rutile deposit in the world. The Fiel Rosita mine is exploring for copper and zinc. Copper is particularly in demand, thanks to its use in electric vehicles (EVs.)

Key said it would use $4.8 million of its proceeds from its IPO to fund the payment and work requirements of the Field Rosita project, spend $600,000 on the engineering and permitting of the Cerro Blanco project and the rest for general corporate purposes and other working capital.

Titanium and copper are considered critical minerals in the Inflation Reduction Act, which means that EV makers get tax credits if their batteries use the minerals sourced in the US or in free trade countries such as Chile.

6. Discord – Broadening Use, Growing Revenue

Founded in 2015, the San Francisco company was created initially for online gamers to be able to easily chat while they were playing, but now is seen as a competitor to Slack and Microsoft Teams. The company’s CEO, Jason Citron, said the platform has 200 million monthly active users. He has said at some point, the company would likely go public with through an initial public offering, though no specific date has been set.

Part of the reason for the company’s popularity is it doesn’t allow advertising, at least yet. Its service is free to users, but the company has several premium services that provide revenue, including Discord Nitro, a premium subscription service that provides extra features and a service where users can pay to boost their servers.

Discord is said to have a valuation of $15 million and it has grown its revenue considerably the last couple of years, going from $310 million in 2021, to $445 million in 2022 to $600 million last year. Discord trimmed 17% of its workforce in January in a move some analysts saw as making the company’s prospective IPO more attractive.

7. Turo – Ride-Sharing Service That Is Already Profitable

Turo bills itself as the world’s largest car sharing service. It began planning to go public in 2021 and 2022 but shelved plans for an IPO on both occasions. However, Turo has kept up with its quarterly S-1 filings with the Securities and Exchange Commission (SEC), showing that it still plans to go public.

Since its first S-1 filing, the company’s latest amended S-1 paperwork shows it has made $3.8 billion in earnings since its inception and grown from 1.3 million active guests, and 160,000 active vehicles across 7,500 cities to 3.8 million active guests and 360,000 vehicles across 14,000 cities. That’s great growth.

Turo’s business model is unique enough that it may give it a significant early mover advantage. It taps into the sharing economy. Cars actually sit idle 95% of the time, so the ability to rent one’s car out would help many users better cope with the increasing costs of buying and maintaining a vehicle. One concern is that while the company began turning a profit in 2022, when it said it had net income of $154.6 million, its net income fell to $14.7 in 2023.

8. Shein – Profitable Retailer’s IPO Faces Regulatory Hurdles

Shein has plenty of detractors, but it’s hard to argue with the company’s financial success since it was launched in Nanjing, China, in 2008. It surpassed Amazon to be ranked No. 1 in global shopping app downloads, according to data.ai’s 2024 Mobile Market Report.

The company moved its headquarters from Nanjing to Singapore in 2022, but the majority of its manufacturing is done by more than 5,400 contract merchants in China. The company had filed in November its plans to have an IPO in the US, but that move has run into regulatory snags in the US and China. After lawmakers raised concerns that company might be using forced labor, the Securities and Exchange Commission has yet to clear the IPO. Shein has also faced lawsuits from competitors for copyright and trademark infringements.

The company, valued at $66 billion in 2022, is already profitable, with its net income growing from $700 million in 2021 to $2 billion in 2023, according to the Financial Times.

9. Stripe – Successful Payment Platform Ripe for an IPO

One of the most prominent among the possible upcoming IPOs could be that of Stripe, a cloud-based payment processing platform that enables businesses to accept payments and manage transactions online.

The tech company just took a big move that should help it expand by playing well with others. It said three of its most widely used products— Optimized Checkout Suite, Stripe Billing, and Stripe Radar—will be still available to companies that process payments with other providers. In the past, larger companies couldn’t use Stripe’s product suite without breaching other long-term contract commitments.

It blew past $1 trillion in total payment volume in 2023, which increased 25% from 2022. Stripe said it was cash-flow positive in 2023, which should allow it to continue to grow. Stripe is popular among small and mid-sized businesses but is also used by companies such as Microsoft, Best Buy,  Amazon, Google, Lyft, Shopify, and Zoom. According to Stripe, more than 90% of US consumers have bought from businesses that use Stripe.

In February, Sripe said investors Sequoia Capital and Goldman Sachs’s Goldman Sachs Asset Management’s growth-equity unit agreed to buy at least $1 billion in stock from company insiders, such as current and former employees in a private-IPO transaction, which valued the company at $65 billion.

The Stripe IPO valuation has climbed by $15 billion the past year, Dow Jones cited a Stripe spokesperson as saying in February. The fintech firm had been valued as high as $95 billion in 2021, according to reports.

10. SKIMS – Celebrity-Backed Retailer Making Revenue Growth a Reality

Thanks to its celebrity endorsements and partnerships, Skims is becoming a competitor of Spanx, the shapewear industry leader. The clothing retailer made nearly $1 million in revenue last year and was named among TIME’s List of 100 Most Influential Companies in 2022.

Jens Grede said more than 11 million people have signed up for product restock alerts on the Skims website because many of its products sell out shortly after going for sale online.

Skims had a $270 million funding round earlier this year that put its valuation at $4 billion. The company is known for its product’s shade range for all skin tones.

Last year, the company added a men’s clothing line and signed a sponsorship deal that made it the official underwear of the NBA, WNBA, and USA basketball. It hired former Nike executive Andy Muri as its CFO, in a move seen as a precursor to the company’s IPO later this year.

How Does the IPO Process Work?

Private companies go public through an initial public offering to raise capital for a variety of reasons. An IPO also helps create market awareness for a business. Once a company goes ahead with an IPO plan, it picks a lead underwriter to help with securities registration and distribution of the company’s shares.

The company then submits a preliminary prospectus that shows information about its management team, its finances, its target market, its competitors. It also sets an expected price range and number of shares for the IPO.

The lead underwriter files a registration statement with regulatory authorities. In the US, it would be with the Securities and Exchange Commission. On the London Stock Exchange, it’s with the Financial Conduct Authority (FCA).  If the regulatory agency deems the statement meets all requirements, preliminary prospectuses are sent out.

The underwriting and selling group then record indications of interest in the IPO by individual and institutional investors. Once the offering price has been set, the selling group accepts confirmed indications of interest and starts the share allocation process.

Even if you are ineligible to participate in an IPO, you can still invest in a company once its shares become available on the market, though that may mean paying more than the price was at prior to going public.

The IPO Slump of the Last Two Years

As we said in the introduction, so far this year, there have been 69 IPOs according to Stock Analysis. This would imply 192 companies going public by the end of the year. Rising stock prices this year helped by the prospect of looming interest rate reductions by the Federal Reserve have increased the appetite for IPOs. IPO valuations have also risen but investors are likely to find quality shares being offered at reasonable valuations.

The following chart shows how the number of IPOs fell in the last couple of years from their post-pandemic peak:

IPO chart, year by year

And this chart below displays how the proceeds raised by the companies going public dropped from 2021:

Global IPO chart

How Should Investors Prepare for Investing in an IPO?

IPOs can represent a gamble because less is known about companies in private ownership than about those in public ownership that have a proven record of earnings over years. There are some things that potential IPO investors should do before buying into an IPO.

Do a Thorough Company Analysis

Understand what you’re investing in and don’t just rely on brand recognition. What is the company’s competition? Does it have any advantages or disadvantages regarding its peers. The company’s prospectus can provide clues to its finances, risks and plans. Read it thoroughly, but also check out media reports about the company. The best companies have solid, well-known underwriters.

Focus on the Fundamentals

The biggest mistake investors make when taking part in an IPO is focusing on the flash over the company’s actual production. There are basic questions you need to answer before successfully investing in an IPO.

How fast is the company growing revenue? Is it already profitable and if not, how close is it to being profitable? Is its management team experienced, with a record of success of bringing other companies public?

Choose the right broker

Not all brokers allow investors to participate in IPOs, and of the ones who do, their eligibility requirements for investors may vary.

Understand the IPO Price

The IPO price is what the company’s stock is sold to accredited investors right before the stock trades on a public exchange. The point of a public offering price is to draw investors into buying the shares, with the hope they will rise once the stock goes public. Sometimes, the opposite happens straight after the debut in the stock market, and the stock price tumbles.

Statista IPO chart
How IPOs have fared on their first day, according to research by Statista.com.

The investment banks that underwrite the IPO set the price, using an analysis of the company’s growth potential, market demand and how it sits compared to peers.

Know the Lock-Up Period

Early investors in an IPO often have a lock-up period where they can’t sell their shares. Once that period ends, the stock can quickly drop because a flood of shares can hit the market. For investors interested in an IPO, sometimes it makes sense to wait for the lock-up period to end before investing in a stock.

Where to Get IPO Tips and Insights

A good source of IPO information is AltIndex, a subscription-based service that uses alternative data and artificial intelligence (AI) to rate stocks. AltIndex updates its data throughout the day.

The company even breaks down major IPOs, as it did prior to Reddit’s IPO.

AltIndex IPO graphic

AltIndex rates companies using an AI score, updated every half an hour with real-time share prices. The AI score relies on several datasets, to show which stocks are likely to be active. Stocks are scored from 1 to 100, simplifying the selection for investors. AltIndex relies on web searches, customer satisfaction ratings, social media, and app downloads, to help it analyze a company.

AltIndex has more than 10,000 members and provides more than 100,000 stock insights and alerts each day, and has a strong win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well as many other useful features.

Conclusion

The IPO market appears to be on the rebound in 2024 after a mediocre couple of years, so it’s worth keeping a tabs on potential upcoming IPOs. This is largely due to a rising S&P 500 Index, which makes companies more confident that their IPOs will be successful. There are several exciting upcoming IPOs across various sectors, from established tech giants Altera and Stripe to innovative newcomers such as Navan and Turo.

Before diving headfirst into any IPO, investors should proceed with caution. Unlike established publicly traded companies, IPOs involve a higher degree of risk due to the limited track record of private companies. Therefore, when considering an IPO, it’s very important to focus on company analysis, and to examine fundamentals such as revenue growth and profitability. On top of that, you need to find the right broker to invest in an IPO.

By understanding the IPO process and conducting proper due diligence, investors can increase their chances of making informed decisions for these offerings.

References

https://www.bloomberg.com/news/articles/2024-01-11/kim-kardashian-s-skims-beyonce-hair-care-lead-2024-celebrity-brands

https://www.intc.com/news-events/press-releases/detail/1692/intel-reports-first-quarter-2024-financial-results

https://www.infoworld.com/article/3714625/databricks-open-source-dbrx-llm-beats-llama-2-mixtral-and-grok.html

https://assets.ctfassets.net/4pxjo1vaz7xk/4YoZpojIbRX6XbEdYPVUxg/6cddf386d1d29beca3c09f3d96c28104/Klarna_Holding_Annual_Report_2023.pdf

https://navan.com/about/press/navan-names-amy-butte-to-board-of-directors-as-audit-committee-chair

https://navan.com/about/press/navan-increases-valuation-series-g

https://www.fortunebusinessinsights.com/travel-and-expense-management-software-market-107118

https://www.businessofapps.com/data/discord-statistics/

https://www.ft.com/content/702223df-2e52-4e62-8f7c-93695a100d9b

https://assets.ctfassets.net/fzn2n1nzq965/1gMd12owbzJaSe4Y560OEJ/c5b932cbe8c0adc0ced520018584ff77/Stripe_2023_annual_letter.pdf

FAQs

What are the top IPOs to invest in right now?

What are the advantages of investing in IPOs?

What are the disadvantages of investing in IPOs?

Jim Halley
Editor
Jim Halley
Editor

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…