It was an unusual year to raise capital through the stock markets. In 2020, even as investors grappled with the worst health crisis of this century, US companies managed to raise a record amount in Initial Public Offerings (IPOs).
Companies raised $ 435 billion in stock sales this year, far more than the previous record of $ 279 billion in 2014. Another surprising element related to these transactions: these IPOs held up after a notable surge during the early trading days when investors looked further. economic, political and operating profit uncertainties.
For those who missed these opportunities and would now like to include some of these great stocks in their portfolios, we have shortlisted the following three names to keep them informed about taking a position when they drop in price
1. Airbnb
Airbnb & # 39; s (NASDAQ 🙂 IPO earlier this month was undoubtedly one of the biggest success stories of 2020. The San Francisco-based vacation rental platform decided publicly even as the travel industry faced one of its worst crises, marked by a collapse in demand for flights and hotel bookings amid the COVID-19 pandemic.
After the business floated when liquidity dried up last spring, Chief Executive Brian Chesky quickly changed his strategy to focus on local lodging when travelers started avoiding long-haul flights.
Airbnb's relative resilience in a historically bad year for the travel industry is the result of a flexible business model that allowed the company to meet customers wherever they wanted to go. That meant city residents fled to less crowded locations or families and groups looking for a vacation close to home.
While these strengths are strongly reflected in the success of Airbnb's IPO, the big question for retail investors is, when is the right time to buy this stock? Shares closed at $ 163.19 on Tuesday, more than twice their IPO price.
After this huge step, the smarter strategy for investors should be to wait and look for a better entry point. That opportunity could arise when the company publishes its first post-IPO earnings report, the date of which has yet to be disclosed.
2. DoorDash
DoorDash (NYSE 🙂 went public last month proving investors appreciated the food delivery platform that caused the pandemic boom in demand for meals delivered to our doors. to be brought.
The San Francisco-based company has a growing subscription program, demonstrating customer loyalty and the potential for repeat sales. DoorDash's subscription program had more than 1 million subscribers from August 2018 to August 2019.
Its pioneering lead has captured 50% of the food delivery business in the US market, well ahead of its main rivals, UberEats (NYSE :), Grubhub (NYSE 🙂 and Postmates, which is also owned by Uber.
But DoorDash shares have become quite expensive after the post-IPO boom. It can also be vulnerable when competition heats up.
DoorDash should be worth $ 40 per share according to Citron Research, citing fierce competition in the food delivery market, lack of customer brand loyalty and possible government regulation. That would mean a 75% drop from Tuesday's closing price of $ 156.79.
The chances of that massive drop are slim in the short term, but investors should take advantage of it when and if this stock falls more than 20% from its current value.
3. Snowflakes
The cloud data software maker Snowflake (NYSE 🙂 is another stock that should be on your buy list in 2021 when the stock price becomes more affordable.
Shares of Snowflake have more than tripled since its IPO in September. The stock closed at $ 341.16 on Tuesday, giving the company a market valuation of more than $ 100 billion.
Sales growth for the California-based company is expected to exceed 80% next year.
But despite investors' extreme positivity about the stock, analysts remain relatively cautious about whether its valuation has become too high. The cloud computing company is trading 83 times against next year's estimated revenue, compared to an average of about five times for companies in the stock index.
Now more than half of the 22 analysts reporting it maintain a hold rating, according to data compiled by Bloomberg, Snowflake shares are now 31% higher than the analyst average price target. Despite these red flags, Snowflakes has a solid company with enormous growth potential.
