Going public is often seen as the next big move for an already thriving business. Once a company's leaders announce an Initial Public Offering (IPO), that company can experience growth that wouldn't have been possible otherwise. But after a business makes the decision to go public, its leaders are now accountable to shareholders, making it a big commitment.
In 2017, experts predict a handful of high-profile companies will finally go public. Here's a sampling of possible IPOs to watch for this year.
Since its launch seven years ago, Uber has revolutionized the transportation market while also providing job opportunities to hundreds of thousands of people. However, the company faces increased competition Just as drivers battle for more rights. Uber's battles over surge pricing and driver tipping haven't kept it from becoming profitable in the U.S., but it still struggles with global profitability. The company's CEO has hinted at going public in recent years, but first he'd like to ensure he's created enough liquidity for the employees who own stock in the company.
Rumors about Dropbox's IPO began when the company reportedly met with investors last year to discuss a public offering. Although the free service is not profitable, a 2014 round of funding put the company's value at $10 billion. In addition to the 500 million registered users Dropbox reports, the service also attracts enterprise teams that include large corporations like Adidas AG. However, the company hopes to move into the cloud-based collaboration market, having added a suite of productivity tools last year to attract more businesses. As last year's partnership between pCloud and Upstream demonstrated, cloud storage companies can grow by reaching out to new markets. One thing that might delay Dropbox's decision is the disappointing performance of competitors Box and PureStorage, which are already public.
Perhaps the most expected IPO of 2017 is Snap, Inc., the parent company of popular messaging app Snapchat. According to a report from the Wall Street Journal, Snap, Inc. will possibly start selling shares as early as late March with a value of $25 billion. The service has worked hard to monetize its business model, primarily through having businesses pay to reach users. The company reportedly told investors it planned to make between $250 million and $350 million in 2016.
Cloud storage company Actifio has been picking up steam in recent years, with pressure to go public naturally increasing. The company's CEO addressed this pressure recently, saying that the company is in the final stages of determining if it can become profitable. However, the CEO says that he believes a company can become successful whether it's public or private. Still, Actifio remains at the top of many lists of companies that are great candidates for an IPO.
When Spotify chairman Martin Lorentzon left the company last fall, experts saw it as a sign that an IPO was a sure bet in 2017. The music service raised $1 billion last March after an $8.5 billion valuation in late 2015. If Spotify doesn't go public soon, it will have to pay a larger rate of interest on its debt and increase the discounts it gives to its investors, making it one of the likelier contenders for an IPO this year.
In 2014, Airbnb's CEO told the Wall Street Journal his company would go public when it has a good reason to do so. Three years have passed since he made that statement, leaving many to speculate that 2017 may be the year. Last August, Airbnb was valued at $30 billion, thanks in part to $850 million it had raised in additional capital. Interestingly, this valuation put it $10 billion above Marriott International, the world's largest hotel chain. The company is expected to acquire an existing travel site to beef up before going public.
This all-flash storage startup recently announced a $75 million funding round that kicked off IPO rumors. Kaminario specializes in storage arrays for businesses, particularly targeting cloud providers with its offerings. The company is preparing to take on storage giants like Dell, which recently merged with IT storage solutions company EMC Corporation and an IPO could be the key to exponential growth. However, Kaminario's ability to raise large sums as a private company may be enough to keep it from going public for a while.
Security is a top priority for many businesses, so it's no surprise to many experts that Okta is on the list of likely IPOs. The identity management company makes it easy for employees to securely sign on to a wide variety of devices. Rumors of an IPO accelerated when the company placed an ad for a job opening that asked for someone with experience in financial reporting for public companies. In the fall of 2015, Okta announced $75 million in funding that took its value to $1.2 billion.
Blue Apron is working hard to go public, including trying to get its cost of customer acquisition down to improve its financials. Late last year, the meal delivery service put its efforts toward an IPO on hold to try to reach the $3 billion valuation the company wants to be able to promise. Those close to the issue told Bloomberg the company was delaying the IPO until sometime in 2017. In 2016, Blue Apron estimated more than $800 million per year in revenue.
Things didn't look promising for this last-minute reservations provider in 2015, when the company announced massive layoffs. However, as 2017 begins, Hotel Tonight has found its footing, having operated at a profit for most of the previous year. The company's CEO has said he would like to take the company public in 2017, making it likelier than those companies that have been ambivalent on the subject. In 2013, Hotel Tonight was valued at $300 million.
Chewy appeals to the many pet owners who don't have time to stop by the pet store for toys, food, and other items. A spokesperson confirmed that an IPO was a possibility in 2017, although the company is still not profitable. In addition to a projected $900 million in revenue for 2016, the company has generated $236 million in funding in addition to an initial Series A investment.
It's no secret that data analytics are a growing part of the corporate world. Palantir specializes in gathering information for government, businesses, and nonprofits, often helping with issues of national importance, such as terrorism and financial fraud. The company is on track to go public soon, with the CEO indicating a changed outlook on a public offering. Although Palantir may be currently preparing to go public, its CEO mentions other options, as well, including private equity or redistributing profits to employees.
Grocery delivery is gradually catching on with consumers and Instacart is one of the most high-profile providers. The company's rapid growth has led to rumors of a public offering, but much of its growth is due in large part to investment dollars. Profitability will be important to the company's success and a partnership with Whole Foods could help facilitate that. In 2015, Instacart's CFO said the company was focused on growth and declined to state where it stood on an IPO.
As companies seek to integrate more applications, platforms like Mulesoft are becoming more popular. Mulesoft uses APIs to integrate a business's existing applications. The company has reportedly been working with firms to arrive at the valuation it will need for a public offering. After starting as an open-source model, Mulesoft eventually converted to a subscription-based platform, but its current value is unknown. In 2014, the company's annual run rate was estimated at $100 million but profitability information is not publicly available. Rumors of an IPO have also been bolstered by the company's recent attention to boosting its offerings.
Buzzfeed has been in the news itself lately, so this may be the year to try for a public offering. NBC has been investing heavily in the company so if Buzzfeed does go public, some of that money will be going back to its investor. According to Recode, these investments have helped Buzzfeed grow to a $1.7 billion company. If Buzzfeed accepts a buyout offer instead of opting for an IPO, it's required to pay NBC back before paying any of its other investors.
Another thriving company that may go public this year is Qualtrics, a user experience platform that helps companies gather information on customers and put it to use. The recent hiring of a new COO ignited IPO rumors, especially considering his background. Zig Serafin comes to Qualtrics from Microsoft, where he led several teams, including Skype for Business. Qualtrics is growing rapidly and is currently valued at $1 billion.
After a slow 2016, experts hope 2017 will bring a large number of new public offerings, giving investors something to be excited about. While many of these companies are still only possible contenders, many of them will likely see continued growth in the coming year, regardless of whether they do so as private or as public companies.