IPO Market Hints at Revival as Major Companies Prepare to Go Public
The stock market recently experienced an impressive turnaround. The S&P 500 (SNPINDEX: ^GSPC) rose by 23% in 2024, marking its second consecutive year with annual returns surpassing 20%. The last time such a performance was recorded was in 1998.
With this rise, the initial public offerings (IPOs) began to rebound. In 2021, over 400 U.S. companies went public, but this trend quickly reversed due to worsening economic conditions, resulting in just 90 IPOs in 2022. The market remained quiet in 2023 as investors grew cautious.
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However, 121 U.S. companies went public through the third quarter of 2024, exceeding the 101 IPOs in the same period last year. Many analysts anticipate that this momentum will extend into 2025, potentially allowing companies like Chime, Databricks, and Stripe to enter the public market.
Here’s what investors should be aware of regarding these anticipated IPO stocks.
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1. Chime
Founded in 2013, Chime is a fintech company that aims to provide simple and free banking services. Its offerings include no-fee checking and high-yield savings accounts, debit cards, and secured credit cards backed by cash deposits. Additionally, Chime offers fee-free overdraft protection up to $200 through its SpotMe feature.
Chime raised $750 million in its most recent funding round in August 2021, valuing the company at around $25 billion, as reported by The Wall Street Journal. While no funding has occurred since, Forge Global lists its value at a similar level. Initially, analysts expected Chime to go public in early 2022, but that plan fell through due to market challenges caused by high inflation and rising interest rates. Nonetheless, the company is reportedly planning its public debut for 2025, although details remain uncertain.
2. Databricks
Databricks, a data analytics software company established in 2013, was recognized by IT consultancy Gartner as a leader in data science and machine learning earlier this year. Gartner’s report indicates that Databricks offers tools that rival those from major players like Amazon Web Services, Microsoft Azure, and Alphabet‘s Google Cloud Platform. This strong positioning within the booming AI sector may make its stock highly sought after once it becomes available.
In December 2024, Databricks raised $10 billion in its latest funding round, giving it a valuation of $62 billion. However, the timing of this funding raises questions about whether the IPO will happen this year. CEO Ali Ghodsi hasn’t ruled it out, but he also mentioned to Axios the possibility of a 2026 IPO instead. Regardless, investors should keep this company on their radar.
3. Stripe
Founded in 2010, Stripe is a fintech company that allows businesses to process payment cards and digital wallets both online and in-store. It also helps e-commerce platforms manage merchant verification, customer payments, and seller payouts.
Stripe competes with payment processors like PayPal and Adyen, and boasts a diverse client list including Amazon, Shopify, and Instacart. Recently, Stripe permitted certain investors to let employees cash out stock, valuing the company at $65 billion according to The Wall Street Journal.
Though Stripe remains a private entity and thus not required to disclose as much information as its public competitors, it reported a 23% increase in total payment volume in 2023. The company also stated in its latest annual letter that it had “robustly cash flow positive in 2023 and expects to be again in 2024.” This strong financial position could make its stock appealing to investors wary of companies that burn through cash as it prepares for its future public offering.
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