Big Week for IPO Market
It’s going to be a big week for the IPO market.
There are more than a dozen companies expected to go public this week. With that many IPOs, it would be easy for some to go overlooked, but there are a few that are getting a lot of attention from investors, including Snowflake, JFrog, Amwell Health, and Unity Software.
Snowflake and JFrog are expected to go public this Wednesday, September 16; Amwell Health’s IPO is expected for Thursday, September 17; and Unity Software plans to go public at the end of the week on Friday, September 18.
You’ve probably read a few articles in reference to the week with headlines that have “IPO Boom” or “IPO Bonanza” in them. The excitement is obvious, so let’s take a glimpse at some of the companies that are enticing investors…
JFrog is a California-based software company that allows companies to use its technology(NYSEARCA:XLK) to deliver software updates across any system. It’s set to list on the Nasdaq(NYSEARCA:QQQ) under the ticker symbol “FROG,” with an expected offer price range of $39 to $41 per share. According to a 2018 market research report by MarketsandMarkets, the global market for DevOps software was estimated at $2.9 billion in 2017 and is expected to reach $10.3 billion by 2023. This type of market forecast puts JFrog in a strong position. The company’s financials indicate that it’s been able to grow its top-line revenue and increase its gross profit.
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Amwell Health is a Massachusetts-based telehealth company that has been able to power more than 2.9 million telehealth visits for its clients in the six months that ended June 30, 2020. It’s set to list on the NYSE under the ticker symbol “AMWL,” with an expected offer price range of $14 to $16 per share. Amwell has been able to grow quickly because of the COVID-19 pandemic. The shift towards telehealth appointments will most likely power a new future for health care(NYSEARCA:XLH), with telehealth appointments becoming a reliable and realistic option for most people.
Unity Software is a California-based software company that’s creating and operating interactive, real-time 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. As of June 30, 2020, it had about 1.5 million monthly active creators in 190 countries. It’s set to list on the NYSE under the ticker symbol “U,” with an expected offer price range of $34 to $42 per share. Unity competes with Epic Games, the maker of the popular game Fortnite. Unity’s future in gaming appears to be extremely promising and lucrative. It’s aiming to raise up to $1.21 billion from its IPO.
Snowflake’s Massive IPO Hits Wednesday
With all that being said, most eyes will be on Snowflake’s IPO because it could be one of the largest of the year. The cloud company recently announced that it’ll be raising its offer price range to $100 to $110 per share instead of the $75 to $85 range that it set a few weeks ago. This is going to be a huge IPO. It plans to offer 28 million shares — giving the company the chance to raise up to $3.08 billion with its IPO.
It will be listed on the NYSE under the ticker symbol “SNOW.” There are 23 banks that are underwriting Snowflake’s IPO. If that wasn’t enough, both Salesforce.com (NYSE: CRM) and Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) will be buying $250 million worth of Class A shares at the IPO price. Berkshire Hathaway has also agreed to 4,042,043 shares from a stockholder at the IPO price in a secondary transaction set to close at the same time as the main offering. This is a rare move for Berkshire Hathaway, which makes this IPO even more unique and exciting to watch.
Snowflake’s prospectus notes:
We believe in a data connected world where organizations have seamless access to explore, share, and unlock the value of data. To realize this vision, we are pioneering the Data Cloud, an ecosystem where Snowflake customers, partners, and data providers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways.
Snowflake’s services have grown more relevant in the modern cloud-computing industry. More and more corporate data resides in the cloud and within other applications, so it’s important for these companies to find a unifying platform that provides better business insights — like Snowflake’s Data Cloud. Snowflake estimates that the total addressable market will be at $84 billion by the end of 2023.
The company prices its services based on usage, and that type of pricing model has been extremely successful and accessible to its customers. So far this year, the company has grown 133% year over year and is on track to surpass the revenue it generated in the fiscal year 2020. Though this pricey IPO will be fun to watch, with its targeted offer price, it’s not a realistic play for everyday investors.
What Does the Rest of the Year Look Like?
While the first half of the year was very slow because of market uncertainty caused by the coronavirus pandemic, the second half of the year has painted a different picture. Wall Street has seen more than 113 companies go public so far in 2020 — that’s a 5% increase from this time last year. The volume that we’re seeing this week could be something that goes into October. It appears that a lot of companies may want to go public before market uncertainty rears its head again.
The upcoming U.S. presidential election in early November will most likely bring about a lot of market turmoil no matter who the next president is — another reason some companies may want to get their IPOs on the calendar before the market reacts to the news of who will be in office for the next four years. It’s going to be an interesting next few months, and you don’t want to miss out.
For more information on these IPOs and other upcoming IPOs and market news, click here.