The New Rules of the IPO

From Airbnb to Stripe — Which Companies Will Actually IPO in 2020?

Nearly 200 companies are expected to go public in 2020. Here are the ones to watch.

This story is part of The New Rules of the IPO, a multi-part special report.
Illustrations: James Clapham

Last year, 159 companies made initial public offerings in the U.S. — a decent number, though hardly a spectacular one. If 2019 public offerings had a theme, it was the year of the disappointing unicorn. Uber and Lyft both went public, and both now trade well below their offering price. Even more notoriously, WeWork scuttled its IPO plans completely — a rather drastic comedown from an offering that would have valued the company at $48 billion. According to PitchBook, the total value of the year’s public offerings was $33 billion, a drop of nearly 30% compared to 2018.

All this casts a bit of a shadow over 2020—but it turns out, there’s still plenty of billion-dollar plus activity in that shadow. Here’s what we’re keeping an eye on in the year ahead.

Airbnb

Perhaps you’ve heard of it? Last September, the ur-unicorn declared its intent to become a publicly traded company in 2020, instantly making it the year’s most anticipated offering. The home-rental behemoth was most recently valued at $31 billion in a 2017 funding round. (Last March, Recode reported that an internal valuation put the figure at $38 billion.) Founded in 2008 after RISD-grad roommates Brian Chesky and Joe Gebbia started renting out an air mattress in their San Francisco living room and decided that the idea of home bed-and-breakfast could scale, Airbnb has asserted that it was profitable in 2017 and 2018. More recent reports, however, say that rising costs pushed it into the red for the nine months ending in September — and that this and the uncertain impact of the coronavirus mean the offering may not happen until the second half of 2020. Many reports suggest that the company is one of several that may issue shares by way of a direct listing — meaning current investors will be able to sell their shares, but the company itself is not raising money. Slack and Spotify are the marquee examples of firms that have taken this route, but Airbnb is part of a small pack that may follow suit this year.

Instacart

Last January, Instacart CEO Apoorva Mehta assured CNN Business that an IPO was “on the horizon.” It didn’t happen in 2019, so maybe this year? The controversial app-based grocery delivery service — you punch in your order on your phone, and a gig economy “personal shopper” fulfills and delivers it — was valued at around $7.8 billion in its last funding round in 2018. By his own account, Mehta cycled through 20 failed attempts to start a company over a two-year period before launching Instacart in his mid-twenties. The startup has had rocky relations with some of its freelance “shopper” workforce, notably paying $4.6 million to settle a class action suit from workers who alleged the company’s policies caused them to lose potential tips. That said, Instacart isn’t exactly radioactive, boasting partnerships with the likes of Walmart, Kroger, and Costco.

Albertsons

According to the Wall Street Journal, it’s been about 15 years since private equity firm Cerberus Capital Management began engineering the creation of today’s Albertsons Cos., which encompasses that namesake grocery chain as well as Safeway and Jewel-Osco — more than 2,200 stores that together racked up around $61 billion in revenue in its most recent fiscal year. Albertsons flirted with an IPO in 2015 (pulling the plug because the market didn’t seem retail-friendly at the time) and again in 2018 through a planned deal with Rite Aid (also scuttled when investors reacted poorly). There’s no public paperwork on this go-round, but the Journal cites an anonymous inside source suggesting the valuation could be around $19 billion. The supermarket sector has been squeezed by Amazon and Walmart, among other factors, but given the critical coverage of private equity’s role in the bankruptcy of Fairway, if this offering does happen it would be a notable private equity success story.

GitLab

GitLab markets a DevOps (translation: software development and operations) platform designed to help clients from Delta to Ticketmaster create and and implement custom software more efficiently. But the nine-year-old company may be just as well known for its idiosyncratic culture: The entire company (1,100-plus employees) works remotely and management strikes a “radical transparency” pose that includes its on the record goal “to go public in CY2020, specifically on Wednesday, November 18, 2020.” The company has explained the weird precision of the announcement by noting that the date is “five years after the first people got stock options with 4 years of vesting,” and as late as possible in the year but before Thanksgiving (on the theory that the markets get quiet after that). The nine-year-old company reports annual revenue growth of more than 140%, with its most recent funding round ($268 million, last September) valuing it at $2.76 billion. GitLab is among the tech unicorns believed to be considering a direct listing.

Madewell

Easily the brightest spot in the not-so-sunny world of J. Crew Group Inc. — and retail-at-large — is the culty, denim-centric Madewell brand: With about 130 stores and counting, its sales increased 13% last quarter, and revenues are up a reported 55% from 2016 to 2018. Meanwhile, J. Crew overall is losing money, the flagship brand’s sales are down, and the private equity-backed company is struggling with a $1.7 billion debt load. A plan to spin off Madewell via an IPO looked a little shaky last year — until creditors signed off in December on a plan that would use a percentage of IPO proceeds to address the debt issue. J. Crew has estimated Madewell’s potential value at up to $2.9 billion, but a Moody’s report in September put it in the $1.2 to $1.9 billion range. The final answer will depend on whether the market can be convinced that Madewell has significant room to grow.

Oscar Health

Promising to use innovative software and other technology to make the health-insurance experience more efficient for both patients and medical practitioners, Oscar launched in 2012 with an eye toward carving out a role in the then-emerging Obamacare marketplace. Notably, its founders include Joshua Kushner, a venture capitalist who is also the brother-in-law of Ivanka Trump. The company’s revenue is growing smartly, it hired a new chief operating officer, and it is well-funded, having raised about $1.3 billion at a valuation of $3.2 billion in 2018. As Axios’ Pro Rata newsletter noted, its future may depend on how the presidential election breaks, and “obviously it wouldn’t favor a Trump reelection.” Awkward.

Robinhood

Late last year, this desktop and mobile no-fee stock-trading platform announced it had passed 10 million users. Founded in 2013, Robinhood is pitched as democratizing the financial markets, and has been particularly popular with millennials. It’s also become a de facto reference point for hot-to-overheated stocks: recently, when Tesla shares soared into bubble territory, CNBC noted that in a single day 12,000 Robinhood accounts bought the stock for the first time. In late 2018, Robinhood’s CEO Baiju Bhatt told the audience at TechCrunch Disrupt SF that the company “is on the path to an IPO.” That didn’t happen in 2019, but the company did raise another funding round, pegging its valuation at $7.6 billion. It hasn’t made its 2020 plans known, but remains on the watch list.

Stripe

Last September, this fintech unicorn’s latest investment came in at a whopping $35 billion valuation, making it one of the “highest-valued startups in the world.” Backers include Sequoia and Andreessen Horowitz, among others. It was founded in 2010 by Irish brothers John and Patrick Collison (now age 29 and 31, respectively) who moved to Silicon Valley to pursue entrepreneurial tech careers. It’s fair to say that’s worked out: At Stripe’s current valuation, they’re said to be worth more than $4 billion each. While there’s little to nothing in terms of actual evidence that the payment software company will go public in 2020, it remains a regular on the IPO rumor mill.

Asana

The work-software firm co-founded by Facebook Mafia’s Dustin Moskovitz and Justin Rosenstein — a Facebook co-founder and former Facebook engineering lead, respectively — hit a $1.5 billion valuation with its most recent funding round in late 2018. Moskovitz and Rosenstein reportedly bonded over shared interests in meditation, yoga, and Buddhism, and say that this has guided their management style as well as the design of their product (its name means “pose”), which work teams use to collaborate efficiently. Last year the company passed $100 million in annual revenue, and reportedly began preparing to go public. In February 2020, the company announced it had confidentially filed its Form S-1 to begin the SEC review process that precedes a public offering; Axios reported that the firm intends to do so through a direct listing.

DoorDash

The food delivery service started by four Stanford students in 2013 isn’t profitable, but it’s reported that one in three Silicon Valley households has used it. Last year it sparked controversy over a confusing system for handling tips given to its gig-worker delivery drivers, and eventually promised to implement a clearer structure. The San Francisco-based startup is reported to be considering a direct offering in 2020. Meanwhile, it has been able to tap other sources of funding, including a $100 million investment in 2019 that valued the company at $12.7 billion. One notable backer: SoftBank, lately most associated with the WeWork debacle.

This story is part of The New Rules of the IPO, a multi-part special report.