2021 YOU CAN'T AFFORD TO MISS 7IPOS IN - Money Morning

7
    IPOS IN
    2021
    YOU CAN’T AFFORD TO MISS

INVESTOR’S REPORT

            7 IPOs in 2021
        You Can’t Afford to Miss
                    By Money Morning Staff Reports

IPOs were red-hot in 2020. They finished the year with a revenue
record of $140 billion. The last record was in 1999 with $108 billion.
In case you missed out, we’ve got seven monster IPOs to look
forward to in 2021:
    •   Instacart
    •   Bumble
    •   Petco
    •   Stripe
    •   Coinbase
    •   Nextdoor
    • ThoughtSpot
We recently witnessed the biggest software IPO in history as
Snowflake Inc. (NASDAQ: SNOW) sold 28 million shares for a
total of $3.4 billion. The share price bolted out of the gate, more
than 150%, from $120 to above $300.
Two rock star app-based companies also went public. Airbnb Inc.
stock (NASDAQ: ABNB) exceeded expectations with $3.7 billion
raised. DoorDash Inc. stock (NYSE: DASH) came out to the tune
of $3.4 billion.
There are some even more exciting IPOs to watch for 2021. These
could go public as early as Q1.
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INVESTOR’S REPORT

How to Think About IPO Investing in 2021
IPO investing can be tricky, since you’re relying on a lot of past
information to judge the future. That’s obviously not going to
give you any clear answers on whether a stock is a buy or not
down the road.
However, you can get some idea of where the company is at in its
growth ahead of an IPO for a rough estimate of its chances.
If you trust the management and find out the company has grown
its revenue significantly in the last few years, it might be out of
the “growth phase.” Its motivation for going public would be more
than a mere cash grab.
Another thing to consider is always the expected valuation and
 price. These can either tell a true story or be immensely overblown
– often the latter – by hype. As a result, you often see a drop after
the IPO.
You could also have the opposite problem. The stock could open
near or below expectations, which could spark negative sentiment.
That’s why it never hurts to give the stock some breathing room
before rushing in.
To learn more about IPO investing, check out our comprehensive
IPO investing guide.
Now, let’s get into these 2021 IPOs.

Instacart IPO Seizes on Digital Shopping Trends
An Instacart IPO is most likely underway in early 2021. It’s a
grocery shopping and delivery app.
The company had massive success as delivery became the primary
mode of grocery shopping during the pandemic lockdowns.
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INVESTOR’S REPORT

Thanks to the boost, this could be one of the biggest IPOs in 2021.
It will go toe to toe with DoorDash, since it recently also expanded
to grocery delivery.
It’s important to remember, however, that many conditions
surrounding its IPO likely won’t be the same. There are three
things that separate Instacart from DoorDash, and it will be
interesting to see how it all pans out.
For one, Instacart was founded by a former Amazon.com Inc.
(NASDAQ: AMZN) employee, likely with some insight into
the Prime delivery business. This could be a logistical leg-up for
Instacart in that battle.
Another leg-up would be that Instacart was founded a year ahead
of DoorDash. This might seem like a marginal difference, but
don’t underestimate the benefit of being a first-mover. The amount
of ground you can cover in a year is significant.
Where it is truly a first-mover is in the “shopping” aspect of its
business. While DoorDash only added groceries to its list this year,
Instacart was the pioneer.
It has several of the familiar problems faced by gig stocks
like DoorDash, Uber Inc. (NASDAQ: UBER), and Lyft Inc.
(NASDAQ: LYFT). Yet, the company had an impressive 2020 and
now could outperform its direct and indirect competition after a
successful IPO…

Should You Buy Instacart Stock?
Instacart was valued at $3.4 billion in 2017. Since then, the
company has rocketed to a $17.7 billion valuation.
Its demand grew 274% year over year due to the pandemic. Since
a successful vaccine will take time to distribute, we could still be
looking at similar growth in the near future.
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INVESTOR’S REPORT

Its latest numbers put the company close behind retail giant
Walmart in online deliveries.

Instacart has been working all 2020 to streamline its order process
with an “order ahead” feature and similar options to bolster its
sales volume.

In addition, the company is partnered with over 500 retailers,
including Walmart. This could give the company increased
exposure to the market.

Unfortunately, it still suffers all the pressures you would expect
from a California gig stock. The state passed a January 2020 law
capping the number of contractors a corporation can hire.

Even if this weren’t the case, Instacart shoppers, similar to Uber
and Lyft drivers, have put pressure on the company to treat them
more like employees, which would raise expenses for Instacart.

The story with DoorDash was that you should consider whether the
company is an Uber or a Lyft. Since their 2019 IPOs, Uber is up
20%, and Lyft is down 37%.

Similarly, the DoorDash versus Instacart battle will be one of
marketing and price competition, which could either drive both
stocks down for a while or prove who’s boss real quick.

It doesn’t help that Grubhub and Uber Eats exist as well.

You could look at the DoorDash IPO to get an idea of how the
stock might perform early on.

The good news is that Instacart will have the cash to expand – the
over 400% cash infusion since 2017 helps that effort.

Be on the lookout for an Instacart IPO in Q1 2021.
                                  4

INVESTOR’S REPORT

Why the Bumble IPO Is One to Watch
In-person dating can be a trial amid a pandemic. But not online
dating, apparently.
According to Statista, 31% of dating app users said they were
using the app more than normal. That was in April 2020, when
pandemic lockdowns were in full swing.
For the time being, dating apps have replaced going to the bar or
other crowded events.
That’s where apps like Bumble and Tinder from Match Group Inc.
(NYSE: MTCH) hope to cash in.
Bumble announced its upcoming IPO in September.
Dating was already headed in a digital direction, and COVID-19
only seals the deal. Even if you have to go contactless, you can
still go online.

Should You Buy Bumble Stock?
Bumble is a matchmaking app like Tinder or OkCupid. But its
model is slightly different. It’s designed so women initiate the
conversation in heterosexual connections.
If that sounds too “specialty” to take off, the numbers say
otherwise. Bumble is one of the most popular dating apps on the
market. It overtook Tinder in audience size this year.
Tinder’s user base was over 7 million in 2019, and Bumble’s was
5 million. Tinder is up to 50 million today. And Bumble, in 2020,
surpassed 100 million users.
That number is poised to grow in the coming years with further
digitization of relationships.
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INVESTOR’S REPORT

When the company IPOs in 2021, it expects to be valued up to
$8 billion. Of course, nothing is set in stone, but just look at
these financials…
Net revenue for 2018 was a up 1,632% from two years prior. It
grew from just $5 million in 2016 to $86.6 million in 2018.
Last year, the company profited $31.1 million, its first annual profit
since being $4.9 million in the negative.
And this company is just getting started – it has only existed
since 2014.
Like Instacart, Bumble will have a fierce competitor at its flank.
Match Group Inc. (NASDAQ: MTCH) is up 104% for 2020.
So far, people being stuck inside looks good for dating app stocks.
As with the gig economy, however, you just have to be careful and
choose the right horse.
Bumble might be one of the top names, but it could change in an
instant. We see this in fresh industries all the time.
EXTRA: The five BEST stocks to buy in 2021 and dozens of
popular stocks to avoid at all costs. Watch now…

Petco Going Public
We know many technology stocks have performed well through
the pandemic. But the pandemic also made people much more
interested in owning pets.
According to CNBC, pet adoptions spiked in 2020. Same-store
sales rose by 9.6%.
This has enticed Petco to file an S-1 in early December. The filing
says the company expects households with pets to increase by 4%
this year.
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INVESTOR’S REPORT

Petco, founded in 1965, is a pet supply retailer. The company sells
pet food, grooming, training, and other products. Right now, they
have over 1,500 locations across the United States.

 Unlike some pet stores, Petco refrains from selling large animals.
While the company sells fish and small birds, its policy is
“adoption first,” an effort to remain in sync with animal activists.
This could point to a forward-thinking front office able to keep a
60-year-old company on the tracks. Here’s whether or not Petco
stock is a buy after the IPO.

Should You Buy Petco Stock?
It’s true that pet adoption has increased this year. You can also
look to other players in the pet supply industry to support the trend.
Chewy Inc. (NYSE: CHWY), an online pet supply vendor, is up
224% since going public in 2019.
While Chewy is tough competition for Petco, Petco’s recent
momentum shows the battle is far from won. Petco recently
invested $300 million to “modernize” its operations – part of that
being a streamlined e-commerce experience.
In addition to that, it is launching a veterinary hospital network,
something Chewy does not have access to right now.
That is where Petco will have a leg-up, and its name recognition
gives the company a competitive moat even in the veterinary realm.
The Petco stock ticker will be “WOOF.” If Chewy’s stock
performance reflects anything, we could be in for even more
growth from Petco.
Editor’s Note: Petco went public on Jan. 14, 2021. Shares opened
at $18 and gained roughly 83% on their first day of trading.
                                   7

INVESTOR’S REPORT

Stripe IPO Comes Just in Time for the
E-Commerce Boom
Digital payments are another trend that exploded in the pandemic,
and we likely haven’t seen the last of it.
Everyone and their mother wants to have their own e-commerce
store. E-commerce makes up around a $3 trillion market, with
online shopping taking a bigger share of retail sales every year.
Stripe is a company that enables those e-commerce hopefuls to get
paid for their goods and services digitally and with ease.
Right now, the company is worth $36 billion. It’s the most valuable
American fintech company yet to go public.
With a growing number of businesses going online, either to stay
relevant or to save on brick-and-mortar capital, this is sure to increase.
It’s not merely e-commerce driving this growth. Use cases for
digital pay have increased with the pandemic. People are paying
for doctor’s appointments through telemedicine, consulting
lawyers and therapists via Zoom Video Communications Inc.
(NYSE: ZM), and much more.
Seeing this opportunity, Stripe plans to pour more money into
optimizing the platform, and an IPO in 2021 will help it do that.
In addition to e-commerce, Stripe has a rich SaaS clientele, with
Salesforce.com Inc. (NYSE: CRM) at the top of the list. SaaS is
another huge potential market set to boom over the next decade,
and that’s potential profit for Stripe.

Should You Buy Stripe Stock?
If you haven’t noticed the trend here, competition is thick for
digital stocks.
                                    8

INVESTOR’S REPORT

Stripe has PayPal Holdings Inc. (NASDQ: PYPL), Square Inc.
(NYSE: SQ), Venmo, and CashApp to contend with. These apps
all serve different use cases, but as this market gets sorted out, it
could get bitter.
How does Stripe stack up financially?
Right now, the company has $2 billion cash on its balance sheet,
meaning it’s valued at 18 times its cash. Square’s valuation is 15
times, with $3.43 billion cash on hand. PayPal’s valuation is 20
times cash.
Square’s latest revenue report came in at $7.56 billion for the
quarter, up $2 billion from previous reports. PayPal’s most recent
quarterly revenue was around $5.46 billion.
Stripe’s is unknown, but you can get some idea of where it will be
based on these numbers. Analysts expect its revenue to be in the
ballpark of $3 billion and $4 billion.
With so many similar, exciting competitors, the same wisdom
applies to Stripe as these other flashy tech stocks. Give it some time.

A Coinbase IPO Could Spark Revolution
On Dec. 17, 2020, Coinbase announced it had filed for an IPO with
the U.S. Securities and Exchange Commission (SEC).
This came as a bombshell for the cryptocurrency industry, as
Coinbase is the primary “crypto wallet” employed by Bitcoin
investors.
It’s essentially an app that facilitates the purchase and holding of
Bitcoin and other cryptocurrencies. It looks and feels like any stock
investing app.
The company could not have picked a better time to file its S-1.
Bitcoin recently hit an all-time high of $43,000, and IPOs are
hotter than they’ve ever been.
                                   9

INVESTOR’S REPORT

Unlike other IPOs we’ve mentioned here, though, this could take
place later-than-sooner in 2021. Coinbase has not specified as to the
structure of its IPO offering. There are a lot of kinks to work out.

It’s rumored the company may go public via digital tokens
on a blockchain ledger. If it went with the traditional stock-
for-cash route, it may ruffle the feathers of a nontraditional,
antiestablishment crypto audience.

Still, the SEC would have to approve such an unconventional deal.

Should You Buy Coinbase Stock?
Coinbase is well established as the go-to crypto wallet for Bitcoin
buyers. And that might just be enough to make it an IPO to watch
for in 2021.

Money Morning’s David Zeiler first wrote about this back in 2014,
including Coinbase in a list of crypto IPO candidates. Then in 2017
he singled out Coinbase specifically as the frontrunner to be the
first Bitcoin IPO.

According to Dave, a full-fledged IPO “will help legitimize crypto
as an asset class.” It gives retail investors some exposure to Bitcoin
and crypto “without the risk and hassle of actually buying and
holding it.”

And getting a piece of Bitcoin may prove worthwhile in the long run.

Bitcoin is making huge strides as an alternate currency, getting
ever closer to the mainstream with each year.

Predictions like $55,000 in 2021 would have seemed wild back
when the cryptocurrency fell to under $10,000. But the current
$33,000 price point and still-growing number of early adopters
make it appear more credible.
                                  10

INVESTOR’S REPORT

Right now, holding just a small percentage of Bitcoin is
encouraged, given that Bitcoin is increasingly scarce over time, but
most of it still needs to be bought up.
There are different crypto wallets to choose from – even PayPal
has a means for you to access your cryptocurrency. But Coinbase
is widely considered “best overall.”
However, the question of whether Coinbase is a buy is still
uncertain. If ordinary IPOs are already a mystery, crypto IPOs can
present a major curveball for investors.

Nextdoor IPO
Nextdoor was valued at just $2 billion in its last funding round,
back in September 2019. It could more than double by its IPO.
The neighborhood networking app could be valued somewhere
between $4 billion and $5 billion by its IPO.
According to Bloomberg, the company has had a few chances to
go public via SPAC merger, but it turned all of those down.
This 2008 San Francisco startup provides a sort of “neighborhood
watch” experience, but with the addition of fostering community
by listing events and services nearby and facilitating conversation
between neighbors.
The app is currently available in 11 countries. In the time of
COVID-19, it proved a hit as people were forced to travel less and
look for ways to engage with their more immediate surroundings.
It could remain an important app in the future if people gravitate to
a more localized lifestyle.
Here is whether you should buy Nextdoor stock after its IPO.
                                 11

INVESTOR’S REPORT

Is Nextdoor Stock a Buy?
Its growing valuation is paralleled by a growing number of U.S.
neighborhoods using Nextdoor. Right now, it serves over 220,000
neighborhoods.
The Nextdoor app allows people to get information on doctors,
dentists, and restaurants in their area. Unlike Yelp, Nextdoor takes
a “hyper local” approach. So, it’s like Yelp Inc. (NYSE: YELP) but
more personal.
This obviously has its benefits – but, if you can imagine, it also has
its drawbacks.
Like many Silicon Valley startups, Nextdoor faces the challenge
of “teaching” its audience how to use a novel service. Many are
familiar with neighborhood watch, but not everyone is comfortable
having the neighborhood in their pocket at all times.
This means, although the company has been successful in many
neighborhoods, the app might take its time to fully catch on with
its potential audience.
That has not stopped VC firms from pouring into the company.
Nextdoor’s total funding to date is over $447 million.
Part of the smart money’s attraction to Nextdoor would have to be
its leadership. Its CEO is Sarah Friar, the ex-CFO of Square Inc.
(NYSE: SQ), the ultra-successful finance app founded by Twitter
Inc.’s (NYSE: TWTR) Jack Dorsey.
While seeing a tested leader at the helm is great, such a quick
expected doubling in valuation could raise some eyebrows. If a
stock is overvalued at its IPO, it can come down quickly.
The best move for this one might be to watch for a slide early on.
As it drops, pick a price point you like and buy.
                                  12

INVESTOR’S REPORT

Is ThoughtSpot the Most Exciting IPO
of 2021?
Tech stocks were an exception to the pandemic crash in March.
Technology was called upon to connect people while they were
apart, whether that meant food delivery or video chats.
That made technology special. And it made tech IPOs unique in a
time when the IPO market looked somewhat shaky.
2020 gave us the biggest tech IPO of all time in September.
Snowflake Inc. (NASDAQ: SNOW) raised about $3.4 billion from
the IPO. The stock went from $120 to $250 per share in its first
two weeks.
2021 holds similar expectations for ThoughtSpot.
ThoughtSpot is similar to Snowflake in combining analytics and
the cloud. These are two huge trends that are going to be at the
center of the digital economy over the next decade.
While the tech industry is somewhat amorphous, different
companies trying to sort out their roles, there seems to be room for
both a Snowflake and a ThoughtSpot.
Snowflake’s primary use case is its cloud data storage.
ThoughtSpot focuses on data analysis.
But that is not the only question to ask if you consider buying
ThoughtSpot stock…

Should You Buy ThoughtSpot Stock?
ThoughtSpot’s leadership comes from across Silicon Valley’s elite
firms – Alphabet Inc.’s (NASDAQ: GOOG) Google, Oracle Corp.
(NASDAQ: ORCL), and Microsoft Corp. (NASDAQ: MSFT).
That could check the box for leadership and direction.
                                 13

INVESTOR’S REPORT

It has been steadily expanding since 2012. The company is based
in Sunnyvale, Calif. But it so far has offices in London, Seattle,
Tokyo, India, and Bangalore.
ThoughtSpot also has a few big names on its client list: Walmart
Inc. (NYSE: WMT), Fannie Mae, Bed Bath & Beyond Inc.
(NYSE: BBB), and Apple Inc. (NASDAQ: AAPL).
Those won’t be the last of big companies needing new ways to
interpret their data.
That’s probably why analysts have given ThoughtSpot a favorable
outlook since its founding. ThoughtSpot was ranked the top data
analytics firm by Gartner in 2020.
So, at the end, yes, ThoughtSpot could be another Snowflake when
it IPOs. The only catch is that, out of all the 2021 IPOs on our
horizon, this might be the farthest off.
Snowflake was a special circumstance where, if you could get it
under $200, you don’t regret buying.
Watch for any financials released over the year to see if your
hopes in ThoughtSpot stock can be affirmed. If you can get it at a
reasonable price point, this one could be a huge buy.

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                                  14

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MM-0121-1902                                                                                             WEB