Unveiling 2023’s Giants: The Biggest IPOs of the Year

The year 2023 has been marked by a comparatively slow pace of initial public offerings (IPOs) compared to 2020 and 2021, when 480 and 1035 IPOs occurred, respectively. In spite of all the challenges, analysts and investors are closely monitoring the situation. They would like to learn more about “biggest IPOs 2023.”

It isn’t hard to understand their position regarding the biggest IPOs of 2023.

Interestingly, there have been 149 IPOs on the US stock market in 2023. As of December 12, 2023, this is more than 14% less than the same time in 2022, which had 175 IPOs by this date.

A shortage of successful IPOs in recent years has caused hesitation among tech companies considering going public due to the volatile market conditions.

However, in September 2023, Arm Holdings, Instacart, and Klaviyo all entered the stock market within a week of each other. Were these IPOs successful, or did they encounter challenges? Let’s delve into their post-IPO performances to find out.

Going public through an IPO can offer substantial benefits for both companies and investors, as it can significantly increase the value of the firm’s shares, as exemplified by Tesla’s CEO, Elon Musk.

Case of Arm Holdings

One of the standout IPOs of 2023 was Arm Holdings, a British semiconductor company predominantly owned by Japanese bank SoftBank, which held around 90% of the company. Arm Holdings went public on September 14 with an IPO worth $54.5 billion, making it the largest IPO since truck manufacturer Rivian’s public offering in 2021.

Arm Holdings primarily generates revenue by designing and producing chips and licensing its products to various customers. Notably, a significant portion of its revenue comes from royalties earned through licensing their chips.

However, there are some concerns regarding Arm Holdings:

1. Valuation: The IPO was priced at 100 times earnings and 20 times sales, an exclusive club for high-growth companies. In the semiconductor industry, it is priced similarly to Nvidia (one of Arm’s customers).

As a reminder, Arm Holdings’ growth has averaged only 15% over the past three years, with a decline observed in 2022.

2. Market conditions: While Arm is a leader in smartphone and PC processors, competitors are rapidly gaining ground, particularly in the smartphone industry, where Arm holds nearly 100% of the market.

3. China: Arm faces challenges related to its Chinese subsidiary, Arm China, which contributes 25% of its business. Tensions between China and the United States add uncertainty to the company’s outlook.

Despite its status as one of the “biggest IPOs in 2023,” Arm Holdings faces pessimism due to these concerns, and its stock price may experience volatility.

Instacart

Another significant IPO of 2023 was Instacart. While Instacart, a grocery delivery platform, enjoyed immense popularity during the pandemic,. Unsurprisingly, its valuation was almost $40 billion. Currently, the company’s valuation is nowhere near that figure.

Despite this, Instacart’s prospects appear more favorable than those of Arm Holdings.

1. Market leadership: Instacart is a market leader in grocery delivery, an industry with ample room for growth as more customers transition to online grocery shopping.

2. Diversified revenue streams: Instacart’s revenue sources extend beyond groceries, with the introduction of Instacart Ads contributing 30% to its revenue in 2022.

3. Steady growth: Instacart’s revenue has exhibited steady growth, and the company achieved profitability in 2022.

While Instacart experienced some initial volatility in its stock price, market conditions appear more favorable for its long-term prospects compared to Arm Holdings.

Klaviyo

We can’t forget about Klaviyo when it comes to “the biggest IPOs in 2023.”

Klaviyo, a global tech company specializing in AI-integrated marketing automation, also went public in 2023 with a valuation of $9.2 billion.

Klaviyo’s revenue has been on the rise, and it aims to expand into new markets, but there is limited information available about its stock market performance.

Birkenstock and its new owners

Birkenstock made its initial public offering (IPO) debut on October 11th, entering the market at the IPO price of $46 per share, valuing the company at $9.3 billion.

This 250-year-old German shoemaker, previously a family-owned business, underwent a significant ownership change in 2021 when the majority of the company was sold to private equity firm L Catterton, backed by one of the world’s wealthiest individuals, Bernard Arnault.

With the German family no longer involved, Bernard Arnault and his fellow investors have ambitious plans to propel Birkenstock’s growth to new heights.

Notably, the Norwegian sovereign wealth fund, valued at $1.47 trillion, along with Financière Agache and Durable Capital Partners, have all committed substantial investments of approximately $300 million each in Birkenstock’s future expansion.

Neumora Therapeutics and Savers Value Village

Neumora Therapeutics has also earned its place among the “biggest IPOs in 2023.”

Moreover Neumora Therapeutics conducted its IPO on September 15 at an IPO price of $17 per share, resulting in a valuation of $2.7 billion. Noteworthy investors in Neumora Therapeutics include SoftBank, Amgen, and Arch Venture Partners.

The history of Savers Value Village dates back to 1954. It is a thrift store chain.

In 2019, with the company approaching bankruptcy, its owners, PE firms Leonard Green and TPG (which had bought it in 2012), sold it to PE firms Ares Management and Crescent Capital with a restructuring agreement.

Savers Value Village went public on June 19, at an IPO price of $18, for a valuation of $2.7 billion.

In summary, Arm Holdings, Instacart, Klaviyo, Savers Value Village, Birkenstock, and Neumora Therapeutics are notable IPOs of 2023, with Arm Holdings standing out as the largest due to its valuation.

However, concerns exist around Arm Holdings, while Instacart appears to have promising growth potential. Only time will tell which of these companies will achieve the most success in the stock market.

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