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With everything that has happened throughout the global markets, it’s hard to believe that we are just now crossing into the second half of 2016. They say time flies when you’re having fun, and since there have been several not fun things happening this year, I guess my concept of time was a bit slowed down.
We started the year with historically bad stock performances across the board, brought on by increased concerns about the state of the Chinese economy and uncertainty surrounding U.S. interest rate hikes. Stocks eventually recovered, just in time for the Brexit to make everyone nervous again.
These events have forced a certain amount of volatility into the markets, and one major consequence has been a very sluggish IPO market. In the first quarter, total global IPO activity was worth just $9.1 billion, compared to $36.1 billion in the year-ago quarter. While that number more than doubled to $22.5 billion in the second quarter, IPO activity was still down 56% year-over-year.
If you want to read more on the trends in the IPO market during the first half of the year, as well as predictions for the remainder of the year, check out our IPO Market Outlook for Second Half of 2016.
With everything in mind, there’s still plenty of time left in the year for some blockbuster deals to go down, and it does look like we might have some major IPOs on the horizon. Here’s three IPOs we still want to see in 2016:
1. Spotify AB
This Swedish company has grown to be one of the biggest names in the music streaming industry, and it’s looking like an IPO is in its near future. In March, Spotify raised $1 billion in convertible debt with the promise that its new investors will receive a 30% discount on shares of its initial public offering, and its 5% interest on that debt will increase by 1% every six months until the company goes public.
While no plans for an IPO have been made public yet, it’s clear from Spotify’s recent convertible debt deal that the company has a public offering in mind. The terms of the deal also encourage an IPO sooner rather than later.
Spotify’s choice to raise money via convertible debt ensures that the company maintains its $8.5 billion valuation without diluting its existing shareholders. However, the company remains in the red and must figure out a way to turn a profit before its gets dwarfed by the increasingly competitive streaming offerings from Apple (AAPL - Free Report) and Alphabet (GOOGL - Free Report) .
2. Jose Cuervo
One of the biggest names in the tequila industry, if not the entire alcohol industry, Jose Cuervo might soon be available on the stock market. Earlier this year, reports surfaced that the Beckmann family, owners of the Casa Cuervo parent company, were looking to take the world’s most popular tequila brand public.
Apparently, the Beckmann’s have hired investment bankers to start working on the logistics of an IPO that could raise up to $1 billion. However, no plans have been officially announced and it is unclear whether Jose Cuervo would list in Mexico, the United States, or both.
Tequila is a $2.3 billion wholesale industry in the United States alone, and Jose Cuervo dominates the market with a 33% share of all tequila business. Back in 2012, alcohol distributing giant Diageo (DEO - Free Report) attempted to buy a stake in Jose Cuervo that valued the company at $3 billion, and that was with total annual sales sitting at just $482 million. Today, Cuervo’s sales are estimated at over $800 million.
3. Blue Apron
Blue Apron, a maker of do-it-yourself meal kits, is reportedly trying to raise cash, and it is considering an IPO as a means of doing just that. The company has apparently held preliminary meetings with banks to discuss its fundraising options and has not yet ruled out a near-future IPO.
We do know that Blue Apron recently brought on Brad Dickerson, a former CFO at Under Armour (UA - Free Report) , who started at the meal kit maker in early 2016. Dickerson was with Under Armour since 2004 and would have had experience bringing that company public.
Blue Apron has been a major part of the recent explosion of meal making kits. The company was launched in 2012, and its two-person, three recipes per week package sells for about $60 per week.
Bottom Line
Even though the IPO market has been sluggish to start the year, there are still many possibilities on the horizon. While I’d definitely like to see a giant like Uber, Lyft, or Airbnb go public soon, time is running out for those companies to start making plans for this year. On the other hand, these three businesses appear to be interested in making something happen soon, and they would all certainly be massive offerings. Here’s hoping we get at least a few more big IPOs this year.
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3 IPOs We Still Want in 2016
With everything that has happened throughout the global markets, it’s hard to believe that we are just now crossing into the second half of 2016. They say time flies when you’re having fun, and since there have been several not fun things happening this year, I guess my concept of time was a bit slowed down.
We started the year with historically bad stock performances across the board, brought on by increased concerns about the state of the Chinese economy and uncertainty surrounding U.S. interest rate hikes. Stocks eventually recovered, just in time for the Brexit to make everyone nervous again.
These events have forced a certain amount of volatility into the markets, and one major consequence has been a very sluggish IPO market. In the first quarter, total global IPO activity was worth just $9.1 billion, compared to $36.1 billion in the year-ago quarter. While that number more than doubled to $22.5 billion in the second quarter, IPO activity was still down 56% year-over-year.
If you want to read more on the trends in the IPO market during the first half of the year, as well as predictions for the remainder of the year, check out our IPO Market Outlook for Second Half of 2016.
With everything in mind, there’s still plenty of time left in the year for some blockbuster deals to go down, and it does look like we might have some major IPOs on the horizon. Here’s three IPOs we still want to see in 2016:
1. Spotify AB
This Swedish company has grown to be one of the biggest names in the music streaming industry, and it’s looking like an IPO is in its near future. In March, Spotify raised $1 billion in convertible debt with the promise that its new investors will receive a 30% discount on shares of its initial public offering, and its 5% interest on that debt will increase by 1% every six months until the company goes public.
While no plans for an IPO have been made public yet, it’s clear from Spotify’s recent convertible debt deal that the company has a public offering in mind. The terms of the deal also encourage an IPO sooner rather than later.
Spotify’s choice to raise money via convertible debt ensures that the company maintains its $8.5 billion valuation without diluting its existing shareholders. However, the company remains in the red and must figure out a way to turn a profit before its gets dwarfed by the increasingly competitive streaming offerings from Apple (AAPL - Free Report) and Alphabet (GOOGL - Free Report) .
2. Jose Cuervo
One of the biggest names in the tequila industry, if not the entire alcohol industry, Jose Cuervo might soon be available on the stock market. Earlier this year, reports surfaced that the Beckmann family, owners of the Casa Cuervo parent company, were looking to take the world’s most popular tequila brand public.
Apparently, the Beckmann’s have hired investment bankers to start working on the logistics of an IPO that could raise up to $1 billion. However, no plans have been officially announced and it is unclear whether Jose Cuervo would list in Mexico, the United States, or both.
Tequila is a $2.3 billion wholesale industry in the United States alone, and Jose Cuervo dominates the market with a 33% share of all tequila business. Back in 2012, alcohol distributing giant Diageo (DEO - Free Report) attempted to buy a stake in Jose Cuervo that valued the company at $3 billion, and that was with total annual sales sitting at just $482 million. Today, Cuervo’s sales are estimated at over $800 million.
3. Blue Apron
Blue Apron, a maker of do-it-yourself meal kits, is reportedly trying to raise cash, and it is considering an IPO as a means of doing just that. The company has apparently held preliminary meetings with banks to discuss its fundraising options and has not yet ruled out a near-future IPO.
We do know that Blue Apron recently brought on Brad Dickerson, a former CFO at Under Armour (UA - Free Report) , who started at the meal kit maker in early 2016. Dickerson was with Under Armour since 2004 and would have had experience bringing that company public.
Blue Apron has been a major part of the recent explosion of meal making kits. The company was launched in 2012, and its two-person, three recipes per week package sells for about $60 per week.
Bottom Line
Even though the IPO market has been sluggish to start the year, there are still many possibilities on the horizon. While I’d definitely like to see a giant like Uber, Lyft, or Airbnb go public soon, time is running out for those companies to start making plans for this year. On the other hand, these three businesses appear to be interested in making something happen soon, and they would all certainly be massive offerings. Here’s hoping we get at least a few more big IPOs this year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>