investing

My top 3 IPO’s to watch for Q1 2021

Exiting times for IPO’s. As a few of the IPO’s skyrocketed in 2020, we do wonder if things will repeat itself in 2021. But not all company’s that had their IPO went to the moon, so its key to pick only the ones you have faith in the most.

In general if its a new company everyone knows and uses then this could be a winner.

There is actually a few IPO’s (or direct listings) I am keeping a close eye on.

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What is an IPO?

An IPO is an initial public offering. When for the first time retail investors have the chance to buy stocks. Although retail investors usually only get access to the stock right after the IPO when its listed on the stock market. So if you have been following a company for a while then this is your chance to have your share of a company. These company’s are often quite new, and still a lot could go wrong. So always due your own due diligence.

1. Coupang – 12th of March 2021

Its quite easy to describe Coupang. They are an online store & delivery service for South Korea. This is the very first upcoming IPO in the list and already has its IPO tomorrow!

Likes

It has a very fast growth, just over 40% per year in South Korea.

South Korea is a small country but it is one of the most modern in Asia, and has one of the best e-commerce economies in the world. It was a market Amazon never managed to penetrate, and now Coupang is doing what Amazon failed to do. It almost got full control over the market.

While not so known here, in South Korea everyone knows Coupang. Not only is it doing what Amazon, Coolblue and Bol.com are doing in Europe (order today, delivery tomorrow), they are doing it better: order today delivery tomorrow morning. Imagining waking up and finding the package you ordered last night at your doorstep.

South Korea had no infrastructure for that, so Coupang had to build this infrastructure from scratch. This will make it very difficult for anyone to copy this in South Korea.

Apart from e-commerce, they also are expanding to other areas such as online payment, and are looking into drone delivery’s. So they do have a future vision.

Dislikes

While South Korea is one of the biggest e-commerce market, its growth will still be limited to South Korea. The main question will be if Coupang can copy this to other countries. Right now they state they are only interested in the South Korean market, but I still hope they will try to expand and copy their success elsewhere at some point and challenge some of the bigger players.

Will I buy?

Much will depend of their valuation to be honest, but I do feel that this stock could be worth it. The lack of ambition of going outside South Korea right now is for sure a downside for me, however they are the first to do better then other major e-commerce companies in delivery time, and are looking at new technologies so there is potential. I think I will definitely watch this stock, but I might not buy it right after its IPO.

2. Coinbase – Q1 2021?

Everyone who has ever bought or considered to buy Crypto has used or heard about Coinbase. Its one of the most common and user friendly cryptocurrency exchanges.

Its also planned to be one of the biggest IPO’s this year. Right now valuations are quite insane and its going for a 100 Billion valuation!

Likes

But it must be said cryptocurrency did skyrocket in 2021, and it would be hard to deny that it will not go away easily. With institutional investors and big companies like Tesla investing in Crypto I have realised cryptocurrency is here to stay. Under the form of its groundbreaking blockchain technology, but also under the form of digital payments using Cryptocurrency.

This could be a whole new industry opening up and we might be still at the very beginning of what will be possible. We are talking about growth rates for this industry of 150% per year and Coinbase could be at the verge of a new era.

Another thing that can’t be underestimated it the huge fanbase cryptocurrency has, and the amount of money that is available in cryptocurrency. Its also an audience that happens to be very good in what they call “HODL” of stocks. Buying and holding until it goes to the moon. If this community gets behind Coinbase there is no telling how high it can go.

Dislikes

Lets be honest with a revenue of about 1-2 Billion a valuation of 100 Billion $ Coinbase is overvalued. You would not be buying into its current value but into its future value. Growth numbers are at 60% pretty immense for an IPO, the question is can they keep this up?

Are you willing to take the gamble and pay the added price for a possible future outlook.

Will I buy?

I’m leaning towards buy, I am a bit turned off by the valuation, but the immense growth of this industry makes me feel like I should not let an opportunity go by.

#3 Robinhood Q1/Q2 2021

Robinhood is another company that hugely benefited from covid. As everyone was staying at home suddenly everyone started to trade and became a “professional” trader. Robinhood is not so known in Europe, but in US its known to trade commission free and therefore making trading stocks much more accessible to small investors.

The most positive point in Robinhood, which you can’t really deny, is the HUGE growth the company knew in Revenue. The most in 2020, but also the years before that cannot be overlooked. As an investor its very difficult to ignore this basic fact. It does show the potential of Robinhood, bringing a growth of over 100% year after year.

Robinhood got a lot of bad advertising when it decided to limit trading on some of the popular stocks with its user like $GameStop and $AMC. The main question is if Robinhood did not suffer a blow in reputational damage here that will consider users to look elsewhere.

Robinhoods brand perception plummeted after $GME disaster
Will I buy?

Even if I live in Europe I have heard about Robinhood. EU could even be a large market Robinhood can still discover. This is exactly why I am watching this IPO. The main question is can Robinhoods brand survive the $GME disaster? Actually you could also look at it from another direction: will Robinhood be undervalued because of its brand damage in January? If so this might just be a great opportunity to get in. I will see its valuation when it comes out, but I’m leaning towards buy.

Conclusions

A lot to look out for the coming months. I couldn’t find any European stocks near IPO that spiked me interest but for sure there will be some later this year!

New to my blog? Follow me and stay up to date of the stocks that Im keeping my eye on, follow my journey to financial independence, and get tips to help you in your journey

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