An IPO (initial public offering) can be the first opportunity for people like you and me to get hold of shares in growing companies.
Here are five big upcoming tech stock flotations for you to keep an eye on in 2022, and tips for investing in these firms.
Which tech IPO events should investors look out for?
The e-commerce experts over at Blend Commerce have put together a collection of tech companies earmarked to go public in 2022.
1. Stripe
This company actually started out in Dublin and has quickly become a worldwide player in the payment processing industry.
The business only seems to be growing from strength to strength with revenues over £5.6 billion. So this could be a major firm to go public in 2022.
2. Klarna
Klarna is another company in the realm of payments, but it focuses more on payment options. The company has taken the idea of ‘buy now pay later’ and managed to implement this form of credit into e-commerce.
This is an attractive gambit for lots of retailers who want to make more sales. Apparently, Klarna has over 300,000 merchants on board and more than 100 million users!
3. Discord
Next up we have Discord, a ‘Voice over Internet Protocol’ (VoIP) company. Sounds pretty futuristic, right? Don’t worry, the company isn’t making alien robots to take over the world. Discord is basically just an online communication platform.
This is a company that benefited from the ‘Zoom boom’ and the fact that lots of communication has moved online because of the coronavirus pandemic. Discord is set to capitalise on this wave by going public in the near future.
4. Chime
A Fintech company based in the technology mecca of San Francisco, Chime is an exciting prospect to look out for.
The business offers fee-free mobile banking and, after numerous rounds of fundraising, an IPO is the logical next step for the firm.
5. Trustly
Coming out of the same country that brought you Spotify (and ABBA), Trustly is a Swedish Fintech firm that’s all about open banking.
The business is aiming to streamline the way you pay for things by allowing direct bank payments without using any middlemen. This is definitely a solid start-up to keep tabs on.
Is it guaranteed that these companies will go public?
In a word, no. Initial public offerings can be quite a tricky business with lots of moving parts and interested parties.
Most companies will want to try and time things perfectly so that they hit the market with a bang. But sometimes, even something small like a little bad press can delay an IPO by months or longer.
It’s also important for a company to have its finances organised properly. This is because an IPO means the company has to open up its books to the public. So it’s in the company’s interest to reveal financials at an ideal moment.
This is why Coinbase (COIN) went public during a crypto boom and Deliveroo (ROO) did so during a takeaway epidemic!
Should you try and invest on the day of an IPO?
Investing on the day of an IPO can be a bit of a coin toss. It’s usually the people who invested privately that have the greatest chance of making a profit.
There can be lots of volatility when shares go public for the first time, especially for tech companies. This is because no one quite knows how the market will value the business.
You can be successful investing on the day of an IPO, but it’s often better to wait until the dust settles. More often than not, there will be decent buying opportunities at some point in the future.
Why is it worth being careful when buying shares at an IPO?
As I just mentioned, when a company goes public it can take some time for it to find its feet in the market.
Even if it’s a solid company with a lot of hype, it’s best to be cautious. There will be a lot of investors and traders looking to capitalise on the excitement and volatility by dumping some stock or taking quick profits.
If you see long-term value in the company, it’s okay to be patient and then invest at a later time.
How can you invest in an IPO?
Sometimes, it’s not possible to invest straight away. This is because there can be a delay between when a stock is listed and when it becomes available to buy through a share dealing account.
Whether you’re looking to buy shares at an IPO or waiting until the fervour dies down, using a stocks and shares ISA is always a smart idea. This type of account can protect your gains from tax.
Just remember that all investing carries risk. You may get out less than you put in, especially when putting money into newly trading companies.
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About the author
George is a writer and qualified financial adviser focused on educating others in personal finance & investing.
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