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IPO Watch: 3 New Stocks Worth a Strong Look

The market for initial public offerings (IPOs), featuring promising new IPOs, has rebounded strongly in 2024, with the number of offerings surpassing last year’s total by 40%. The combined valuation of this year’s IPOs has more than doubled compared to the previous year, sparking speculation about future public offerings.

Despite this upturn, the IPO market is still recovering from a 2021 surge when 396 companies went public. According to Goldman Sachs, only 16.4% of the 2021 IPOs are trading above their offer price, with approximately 84% below their initial value.

The tech sector is waiting for better market conditions or for businesses to grow into their valuations before going public. Goldman Sachs strategists note that while more IPOs are occurring now than in the past two years, the volume remains behind historical levels and significantly lower than in 2021.

A valuation gap persists between companies seeking to go public and investor expectations. The upcoming presidential election is expected to influence the IPO market, with many companies likely to postpone their public debuts until after the political uncertainty settles.

Industry experts anticipate a more normalized IPO market in 2025, potentially featuring multiple tech company IPOs each week. Currently, about 191 companies are in the pipeline to go public, though many may delay their listings.

Here are three promising new IPOs to consider following their market debut.

Tempus AI (TEM)

Among the promising new IPOs, Tempus AI (NASDAQ:TEM) specializes in the application of artificial intelligence (AI) to process medical data, aiming to assist doctors in delivering more effective treatments to patients. Tempus AI’s innovative approach to analyzing medical tests has garnered significant attention in the healthcare industry.

Shares in this healthcare technology company soared on its Nasdaq stock market debut. The company saw its shares open at $40, exceeding the initial public offering (IPO) price by $3. During the trading session, the stock witnessed a significant jump, nearly 18%, reaching $43.64 at its peak. 

In its IPO, Tempus AI successfully sold 11.1 million shares, with the final price of $37 per share sitting at the upper limit of its anticipated price range of $35 to $37. The company announced that the IPO proceeds amounted to $410.7 million, aligning with the higher end of their target.

Among the notable investors in Tempus AI is Alphabet (NASDAQ:GOOGL), the parent company of Google, indicating strong backing from a leading player in the technology sector. The company’s leadership includes Founder and CEO Eric Lefkofsky, who is also known for founding the e-commerce marketplace Groupon. 

Lefkofsky shared with CNBC his optimism about the company’s financial future, projecting that Tempus AI is on track to become cash flow positive and adjusted EBITDA positive by sometime in 2025, despite currently operating at a loss.

Waystar (WAY)

Waystar (NASDAQ:WAY), a key player among this year’s promising new IPOs, is a healthcare payments company, that recently debuted on the U.S. stock market. Its initial public offering (IPO) was priced at $21.50 per share, opening slightly lower at $21. Despite a revenue increase, shares closed at $20.70 on the first trading day, falling short of expectations within the anticipated $20 to $23 range.

The company is known for providing healthcare payment and revenue cycle management solutions and now trades under the ticker symbol “WAY.” This IPO marks a significant development amid a cautious environment for tech firms, influenced by economic concerns following the bull market downturn in late 2021. Notably, Waystar is the first digital health company to go public in 2023.

Founded in 2017 through the merger of Navicure and ZirMed, Waystar processes over 5 billion payment transactions annually. CEO Matt Hawkins highlighted the public listing’s benefits, including increased awareness and credibility, and the opportunity for further investments, particularly in generative AI technologies.

For the quarter ending March 31, Waystar reported revenues of $224.8 million, an 18% increase from the previous year’s $191.1 million. However, the company also disclosed a widened net loss of $15.9 million for the quarter, compared to a $10.6 million loss in the same period last year.

Webtoon Entertainment (WBTN)

Webtoon Entertainment (NASDAQ:WBTN) set its share price at the high end of its targeted range, successfully raising $315 million. The online comics company, supported by South Korea’s Naver Corp., offered 15 million shares priced between $18 and $21. The IPO pricing gives Webtoon a market valuation of approximately $2.7 billion.

The interest from major investors was evident as BlackRock Inc. (NYSE:BLK) managed accounts expressed their intention to purchase up to $50 million worth of shares, highlighting confidence in the company’s market debut. 

Naver Corp., a conglomerate known for its diverse online services, will retain control of over 60% of Webtoon’s shares post-offering. Moreover, Tokyo-based LY Corp. will hold a significant stake of around 25%.

Webtoon has established a substantial user base, connecting 24 million creators with roughly 170 million monthly active users across more than 150 countries. Despite its impressive reach and $1.28 billion in revenue last year, the company reported a net loss of $145 million. 

The interest in webtoons has surged, particularly in the United States, positioning the digital comics platform as one of South Korea’s prominent cultural exports, alongside K-pop and television dramas.

The IPO is managed by an array of financial institutions, including Goldman Sachs, Morgan Stanley (NYSE:MS), JPMorgan Chase (NYSE:JPM), and Evercore (NYSE:EVR). 

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.

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