With speculation growing around household names Snapchat, Spotify, Uber, Airbnb and Dropbox, we’ve put together an overview of prospective tech IPOs for 2017 – and the potential key factors for a more promising year ahead.
As we steam into 2017 the time seems ripe for the financial industry to reflect on the difficulties tech IPOs experienced over the past year, together drawing the lowest number of investments since 2009.
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With global economic uncertainties, the UK’s vote to leave the EU and Donald Trump’s imminent arrival as a leader on the world’s stage, analysts are positive that 2017 must herald an improvement and investors are calling for a period of stability.
So, what predictions can be made about the year ahead for tech IPOs? With the lull of activity in 2016, analysts are positive about a better 2017, not only in the quantity of offerings, but in heralding a potential wave of big names in the marketplace. Here is our selected pick of candidates.
Snap Inc considers the bigger picture
The first and perhaps most watched among these is Snap Inc, the parent company of messaging app Snapchat, which reportedly filed confidentially for an initial public offering that could value the startup at more than £25bn. If this were to IPO, technology companies and investors would be watching acutely to see if it triggers a wave of tech IPOs entering the marketplace.
By succeeding in maintaining a strong position within their target market of 18–24-year-olds, the future appears positive, although some doubt has been cast on the longevity of Snap Inc's product offering and subsequent long-term growth prospects.
Could Spotify be a big hit in 2017?
According to sources familiar with the company, the music streaming service has been rumoured to list as an IPO for years. Could 2017 see this finally happen? It could be highly likely due to pressure from terms in its latest fundraising round and, according to the Wall Street Journal, as a result of debt conditions.
In an arguably saturated marketplace and an area where it is hard to return a profit, Spotify is a highly regarded contender, with a large subscriber base and a strong social media presence adding to its value as a potential tech IPO.
Is Uber en route for ongoing regulatory battles?
Ride-hailing startup Uber begins 2017 uncertainly. With continuing regulatory battles, increased media coverage of self-driving cars and the wider complexities of operating its driver-based business, there are numerous challenges afoot for the highly recognisable tech company. Furthermore, Uber’s business model is under question as a widespread ruling finds that drivers are employees, a consequence which could have major implications for the company.
By cutting its losses and ending its UberChina business, Uber joins a rank of US tech companies to have merged unprofitable Chinese operations with its Chinese rival. This could be demonstrative of an astute business decision and therefore seen by investors as a welcome outcome.
However, the financial positioning of the company, including a $5bn round in 2016, and its reluctance to release its figures, could make the timing and likelihood of IPO less certain.
Could Airbnb be rated highly for IPO?
Similar to Uber, Airbnb is also facing a regulatory battle, this time in the form of short-term housing regulation, with the most recent example from New York City. It is expected that this will continue through 2017, making it key for Airbnb to work hard to build stronger relationships in major cities.
Airbnb raised $850m from funding in September 2016, valuing the company at $30bn. With this in mind, it seems clear that Airbnb is not struggling for cash; nor is it surprising that the company has broadened its services, offering local experiences arranged through hosts and looking into the possibility of booking flights and other services on their platform.
Though exciting prospects for investors to monitor, these expansions to the business could take the majority of 2017 to materialise into revenue and it may be more likely for an expected IPO listing from 2018 onwards.
Will Dropbox share its success in 2017?
Drew Houston, CEO of file-sharing company Dropbox, remains elusive as to the possibility of an IPO in the near future. Following reports of a positive cash flow for the company in June 2016, and with several software companies testing the public market, there are many reasons for Dropbox to list in 2017, not least among them greater name recognition to stand out amongst competitors such as Google and Amazon.
Will Dropbox follow these auspicious breadcrumbs to IPO this year? That remains to be seen.