Reddit Defies IPO Expectations, Potential IPOs in 2024
**Reddit** (NYSE:RDDT) has been experiencing significant post-IPO growth, defying expectations, and maintaining momentum even as options traders prepare for next week’s options launch. This comes as a surprise considering IPOs have been stagnant in recent years, with SPACs taking center stage in bringing companies public during the pandemic. However, Reddit’s IPO could signal a change in the IPO landscape, and three companies are tentatively planning to go public in 2024.
One of these companies is Panera, which was previously a public stock that saw a more than 50% return before being delisted due to its acquisition by German conglomerate JAB Holding Company in April 2027. In comparison, the S&P 500 only returned 7.5% during the same period. Panera is now preparing for relisting, making it an exciting IPO to watch, as its past performance can offer insights into its potential. However, leaked internal documents reveal that the company may be loosening its strict food quality standards as part of a $21 million cost-saving initiative to enhance its pre-listing prospects. This includes the use of some antibiotics in pork and turkey products, as well as animal products in the feed given to chicken and cattle. Despite this controversy, Panera’s IPO remains intriguing, as it will test whether markets tolerate such cost-saving measures or if activist investors push for quality retention, similar to what we’ve seen with Chipotle (NYSE:CMG) stock.
Shein, a fast-fashion brand, is currently debating whether to pursue an IPO. The company is considering listing on either the London Stock Exchange or the New York Stock Exchange. One of the main concerns stems from the growing skepticism towards Chinese-based companies. However, recent estimates value Shein at as much as $66 billion, and with potential synergies from its partnership with Forever 21 brands, its market capitalization could further increase. The plan involves selling Shein clothing in Forever 21’s physical retail stores, a departure from Shein’s existing digital sales model.
In a similar vein to Reddit’s IPO, there is speculation about a potential IPO for Discord, a platform with over 200 million active monthly users. While the timing for the IPO is uncertain, Discord’s strong sales, which quadrupled to $600 million over the past four years, make it a promising prospect. Additionally, Discord differentiates itself as a private alternative to most social media platforms, reducing competition from Reddit and similar stocks. The company also turned down a $12 billion buyout offer from Microsoft (NASDAQ:MSFT) in 2021, highlighting its confidence in its own value.
Overall, these upcoming IPOs offer intriguing opportunities, with each company bringing its unique strengths and challenges to the table. As these companies seek to go public, investors will be closely watching their performance and market reception.
Analyst comment
Positive news: Reddit experiencing significant post-IPO growth, defying expectations. Panera preparing for relisting after strong performance. Shein considering IPO with potential synergies from partnership with Forever 21. Discord’s strong sales and differentiation as a private platform make it a promising prospect.
Negative news: Panera’s leaked documents revealing potential loosening of food quality standards. Skepticism towards Chinese-based companies may affect Shein’s IPO.
Neutral news: Speculation about potential IPO for Discord, timing uncertain. Three companies tentatively planning to go public in 2024, signaling a potential change in the IPO landscape.
As an analyst, the market is likely to be receptive to these upcoming IPOs due to strong performance, differentiated offerings, and potential synergies. However, concerns over food quality standards and skepticism towards Chinese-based companies may impact market reception.