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The late-2023 initial public offering (IPO) market has been marked by the anticipated debuts of Instacart (NASDAQ:) and Arm Holdings (NASDAQ:), according to James Royal, Ph.D. While these companies did not make the top 10 list, which requires a $54 billion valuation based on total company stock value at pricing, they have nonetheless sparked considerable interest.
InvestingPro data shows that Instacart, with a market cap of 2830M USD, and Arm Holdings, with a market cap of 8780.44M USD, are attracting attention despite not making the top 10 list. Instacart has a P/E ratio of 39.28, indicating a high earnings multiple, which is one of the InvestingPro Tips for strong earnings. Arm Holdings, on the other hand, has a P/E ratio of 31, which is slightly lower but still indicates a robust earnings potential.
Research from Bain & Company suggests that these stocks typically underperform in the long run. In fact, median stocks lag by 46 percentage points over a five-year period when compared to their publicly listed peers. This observation underscores the importance of considering long-term performance when evaluating the potential of newly listed companies.
The resurgence in the IPO market comes after a period of relative quiet, with investors showing renewed interest in new listings. The debuts of Instacart and Arm Holdings are seen as significant events in this context, even though they did not reach the high bar set for inclusion in the top 10 list.
The specifics regarding the value of all the company’s stock and money raised in the offering were not disclosed. Their anticipated debuts have already generated substantial interest among investors, indicating a positive sentiment toward these companies’ potential. Specifically, the InvestingPro data shows that both companies have experienced revenue growth, with Instacart at 16.58% and Arm Holdings at 21.47%, which is a positive sign for investors.
The late 2023 IPO market revival highlights investor appetite for new opportunities, despite research indicating that such stocks may underperform over time. As such, it remains crucial for investors to consider a broad range of factors when evaluating potential investments in newly listed companies. The InvestingPro Tips, which include insights such as the importance of strong earnings and revenue growth, can provide valuable guidance in this regard. For even more insights, consider subscribing to InvestingPro, which offers additional tips for investors, available at InvestingPro Pricing.
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