Although the recent turmoil in world markets might portend otherwise, 2016 is likely to be a strong year for initial public offerings.
Not only are there numerous highly valued tech companies looking for an exit, economic fundamentals remain moderately strong in the U.S., which has been eking out economic gains since late 2009.
Things may, however, get off to a slow start. The fourth quarter of 2015 saw a steep slowdown in initial public offerings, following on the news of economic weakening globally, a commodities rout, a perhaps too-strong dollar, and rising interest rates. And economic disquiet seems to have continued into the early part of the year, with news of China's stock market meltdown.
"We need to keep a close eye on the January deals," says Nelson Griggs, executive vice president of listing services for Nasdaq, where roughly 75 percent of the 2015 IPOs listed. He adds that regardless of market swings, investors now more than ever will have an appetite for deals with strong fundamentals.
With that in mind, here are 10 best bets for 2016, based in part on research from Renaissance Capital, the IPO adviser, which examines public offering deal pipelines.
The biggest media company serving the Hispanic market, with 49 million monthly viewers, filed its IPO papers in July, just as the stocks of public media companies got a drubbing from investors. Univision also became somewhat controversial after it reportedly severed its ties last June with Donald Trump, who at the time was part-owner of the Miss Universe franchise. The move was prompted by the Republican front-runner and real estate mogul's derogatory comments about Mexican immigrants. In its IPO filing, Univision says it plans to raise $100 million.
The spin class studio cult phenomenon filed its papers to go public in July, expecting to raise $100 million from its IPO. The company counts 38 studios nationwide, and 300,000 customers who are mostly based in Los Angeles, New York City, and San Francisco. Its revenue has increased 48 percent to $112 million for the full-year 2014, compared to the full-year 2013, according to its filing. Profits increased by 42 percent to $25 million over the same period.
In December, personal computer maker Dell filed IPO papers to spin off this IT network security subsidiary, which helps enterprise networks detect and respond to cyber-security breaches. Dell is seeking to raise $100 million through the offering, and says SecureWorks has 4,100 customers in 61 countries.
The national supermarket filed its papers to go public in July. It is one of the largest food and drug chains in the U.S., with more than 2,200 stores in 33 states, including brands such as Acme, Safeway, and Tom Thumb. In November, Albertsons priced its shares between $23 and $26. On the high end, the company hopes to make $170 million from the offer.
The $10 billion cloud storage company hired a new chief financial officer at the beginning of 2015, which signaled to some market observers it was planning an IPO. But Dropbox seems to have reconsidered after watching the lackluster performance of its competitor Box last year, following its own January IPO. Nevertheless, Dropbox has raised $600 million from venture capital firms BlackRock, Sequoia Capital, and others. And although BlackRock cut its valuation of its shares in the company by 25 percent, according to The Wall Street Journal, Dropbox has a whopping 400 million customers and some eight million companies using its services. Metrics like that might be the foundation for a strong public offering.
The online visual pin board is one of the hottest social media properties around. Currently valued at $11 billion, Pinterest has raised $1.3 billion from Andreessen Horowitz, Bessemer Ventures, and Rakuten, among others, since its 2010 launch. And this summer, it announced it had reached an important threshold: 100 million users per month, which ranks it after Twitter and Facebook. Though company co-founder Ben Silbermann told Fortune in the spring of 2015 that he had no short-term plans to take his company public, the rapid growth of the company may make him reconsider.
More than a few tech observers were amazed when the disappearing-message app creator rebuffed Facebook's $3 billion offer for the company in 2013. Now the company is worth $16 billion. But questions linger about whether founders Evan Spiegel and Bobby Murphy can get that kind of value in a public offering. Snapchat faces competition from other startups, as well as Facebook, and institutional investor Fidelity Investments decreased the value of its private shares by 25 percent in late 2015. Yet Spiegel has reportedly said the company has plans for an IPO soon.
Few non-consumer companies get the kind attention that the big data analytics company Palantir gets. Among other things, its pattern detection technology has been credited with uncovering the Bernie Madoff Ponzi scheme, and helping the Central Intelligence Agency capture Al Qaeda terrorist Osama bin Laden. Palantir is reportedly close to sealing another $900 million in financing, putting its value at more than $20 billion. While some experts debate whether a company that sorts so much secret data might not be better as an acquisition candidate, an IPO is not that far off the mark either.
The lodging share site is the second most valuable startup after Uber, worth about $25 billion. Based in San Francisco, the company, founded in 2007 by Nathan Blecharczyk, Brian Chesky, and Joe Gebbia, has raked in $2.4 billion from VCs that include General Catalyst Partners, Andreessen Horowitz, and Eniac Ventures. Yet momentum is with the company. More than half of its venture investments to date took place in the second half of 2015. Meanwhile, the company's revenue doubled to $340 million in the third quarter of 2015, compared with the third quarter of 2014. It still operates at a loss, however.
The ride share company is the most highly valued startup today, worth roughly $50 billion. Yet that value may notch even higher this year, to more than $70 billion, as the company is reportedly in talks to receive more venture capital financing. If that's the case--and the company chooses to go public--its value would clock in at $20 billion more than Facebook's prior to its IPO in 2012.