Financial markets are seeing a flurry of tech IPOs lately. According to a report by FactSet, the volume of IPOs doubled in 2020, presenting a 150% increase from 2019 levels. According to the financial data company, 494 IPOs were recorded in 2020, raising $174 billion.
Though 2020 was a year of uncertainties for most sectors due to the pandemic, investors turned bullish on the tech stocks due to the industry’s ability to adjust according to the new normal. The remote working policy by many major companies allowed the tech stocks to soar and reach new heights. In the past year, NASDAQ-100 Technology Sector gained 42.2%. Moreover, FactSet published a report which suggested that technology companies raised $34.3 billion in 15 IPOs in 2020.
In 2020, several tech companies went public, including big names like Airbnb, Inc. (NASDAQ: ABNB) and DoorDash, Inc. (NYSE: DASH). Colorado-based software company Palantir Technologies Inc. (NYSE: PLTR) was also one of the high-profile companies that went public in 2020.
The trend seems to continue in 2021 as many companies have already gone public through IPOs, SPACs, or direct listing in the first half of the year. The Renaissance IPO Index, a stock market index that consists of U.S.-listed newly public companies, has soared by 38.6% in the past year. The technology sector accounts for 46.9% of the Renaissance IPO Index.
Some of the tech companies that went public recently include Confluent, Inc. (NASDAQ: CFLT), SentinelOne, Inc. (NYSE: S), Coinbase Global, Inc. (NASDAQ: COIN), and UiPath Inc. (NYSE: PATH).
The crypto trading platform, Coinbase Global, Inc. (NASDAQ: COIN) managed to earn the largest valuation in 2021 so far with $86 billion following its direct listing. South Korea-based e-commerce company Coupang, Inc. (NYSE: CPNG) launched one of the biggest IPOs so far with a $60 billion valuation. Coupang, Inc. (NYSE: CPNG) managed to raise $4.6 billion in its IPO. UiPath Inc. (NYSE: PATH) went public on April 22 in one of the biggest US software IPOs, raising $1.3 billion.
There is no doubt in the fact that many investors prefer to participate in IPOs as the initial share price can be of good value. But investing in newly public companies can make or break your investment portfolio. According to financial analyst Doug Boneparth, IPOs do not determine which way the company is going in the future. Moreover, Forbes also published a report, asserting that 60% of recently public companies generated negative returns between 1975-2011. According to experts, researching about the stock and investing a small fraction of cash could help investors make big with the new companies. Before investing, investors should consider the risks, expenses, and charges carefully.
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 124 percentage points. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
15 Best New Tech Stocks to Buy Now
15. Couchbase, Inc. (NASDAQ: BASE)
IPO Date: July 22, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Couchbase, Inc. (NASDAQ: BASE) is an American software company that deals in the high-performing modern databases used for interactive applications. Many of the world’s largest companies are the customers of Couchbase, Inc. (NASDAQ: BASE), which also includes over 30% of the Fortune 100 companies.
On July 22, Couchbase, Inc. (NASDAQ: BASE) had a solid IPO, raising over $200 million. The company’s Annual Recurring Revenue, or ARR, is growing at a CAGR of 26%, reaching $110 million in FY21. The consolidated revenue stood at $103.3 million. In Q1 FY22 Couchbase, Inc. (NASDAQ: BASE) generated $3.39 million in revenue, up 26.7% from the prior-year quarter. The stock has gained 4.2% since its IPO.
14. Clear Secure, Inc. (NYSE: YOU)
IPO Date: June 29, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Clear Secure, Inc. (NYSE: YOU) is a technology company that specializes in secure identity platform that links individuals' personal information with biometric data. The company’s software offers security applications for airports and other venues. Clear Secure, Inc. (NYSE: YOU) was founded in 2010.
In FY20, Clear Secure, Inc. (NYSE: YOU) generated over $230.7 million in revenue, up from$192.2 million in 2019. In July. JPMorgan initiated its coverage on Clear Secure, Inc. (NYSE: YOU) with an ‘Overweight’ rating and a $52 price target.
The firm believes that the company reflects growth prospects and is expected to expand in adjoining markets. Stifel also initiated its coverage on the stock with a ‘Buy’ rating in July. Clear Secure, Inc. (NYSE: YOU) debuted on the stock market on June 30 and gained nearly 25% in its IPO. The stock has soared by 47.7% since then.
13. Shoals Technologies Group, Inc. (NASDAQ: SHLS)
IPO Date: January 27, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Shoals Technologies Group, Inc. (NASDAQ: SHLS) is a technology company that provides solutions in the electrical balance of systems or EBOS for solar energy projects. The main aim of the company is to reduce installation costs through EBOS solutions and is regarded as the first company to market ‘plug-n-play EBOS systems. Shoals Technologies Group, Inc. (NASDAQ: SHLS) was founded in 1996 and is headquartered in Portland, U.S.
In Q1 2021, Shoals Technologies Group, Inc. (NASDAQ: SHLS) reported revenue of $45.6 million, up from $40.7 million during the same period last year. Gross profit also increased 32% to $18.8 million, compared with $14.2 million in the prior-year quarter. For FY21, Shoals Technologies Group, Inc. (NASDAQ: SHLS) expects revenue in the range of $230 million to $240 million. In July, JPMorgan raised its price target on Shoals Technologies Group, Inc. (NASDAQ: SHLS) to $46, with an ‘Overweight’ rating on the shares.
Shoals Technologies Group, Inc. (NASDAQ: SHLS) went public on January 27 and raised $1.9 billion in its IPO. The stock has gained 6.68% since then.
ClearBridge Investments released its first-quarter 2021 investor letter and mentioned Shoals Technologies Group, Inc. (NASDAQ: SHLS) in it. Here is what the firm has to say about SHLS:
“Shoals Technologies, another new position, manufactures electric balance of systems (EBOS) components for ground-mounted solar projects and has been gaining market share for quality of service and price. The company has been primarily operating in the U.S. but is planning to expand internationally with its patented technology, and we see attractive secular growth in Shoals’s end markets.”
12. ZipRecruiter, Inc. (NYSE: ZIP)
IPO Date: May 26, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
ZipRecruiter, Inc. (NYSE: ZIP) is an online job marketing company that uses AI-matching technology to carry out the process. The company’s online portal was designed to improve the job search experience for its users. ZipRecruiter, Inc. (NYSE: ZIP) was founded in 2010.
In Q1 2021, ZipRecruiter, Inc. (NYSE: ZIP) reported revenue of $125 million, presenting an 11% year-over-year growth. The company went public via a direct listing on May 26, 2021, with the stock soaring by 17% to $21 per share. For the second quarter, ZipRecruiter, Inc. (NYSE: ZIP) expects revenue in between $157 million to $163 million. Barclays initiated its coverage on the stock with an ‘Overweight’ rating and a $30 price target. The firm admired ZipRecruiter, Inc. (NYSE: ZIP) due to its deployment of AI-based matching software. The stock has soared by 33.3% since it went public.
11. Monday.com Ltd. (NASDAQ: MNDY)
IPO Date: June 10, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Monday.com Ltd. (NASDAQ: MNDY) is an Israeli software company that specializes in a Cloud-based platform. With the help of the company’s software, Work OS, its consumers can easily build software applications and work management tools that according to their needs. Monday.com Ltd. (NASDAQ: MNDY) has over 110,000 customers worldwide and is headquartered in Tel Aviv.
In Q1 2021, Monday.com Ltd. (NASDAQ: MNDY) reported an 85% year-over-year growth in revenue at $59 million. The company went public on June 10 and raised over $574 million in an IPO. In July, Cowen analyst J. Derrick asserted that Monday.com Ltd. (NASDAQ: MNDY) has one of the highest growth rates among all of the software. The firm started its coverage on the stock with an ‘Outperform’ rating and a $275 price target. Needham is also positive on Monday.com Ltd. (NASDAQ: MNDY) and initiates its coverage on the stock with a ‘Buy’ rating.
Monday.com Ltd. (NASDAQ: MNDY) has soared by 24.06% since its IPO.
10. Procore Technologies, Inc. (NYSE: PCOR)
IPO Date: May 19, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Procore Technologies, Inc. (NYSE: PCOR) is an American construction company that provides services in construction management software. With the help of the company’s project management tools, the users can increase project efficiency by streamlining project communication and documentation. Procore Technologies, Inc. (NYSE: PCOR) has completed over 1 million projects, worth $1 trillion.
Procore Technologies, Inc. (NYSE: PCOR) announced Q2 2021 results on August 5 and reported a 27% year-over-year growth in revenue at $122.8 million. The company also reported addition of 481 new customers, reaching 11,149 customers at the end of Q2. Due to the strong results, Procore Technologies, Inc. (NYSE: PCOR) expects revenue in the range of $496 to $499 million in FY21. Recently, Canaccord lifted its price target on Procore Technologies, Inc. (NYSE: PCOR) to $110, with a ‘Buy’ rating on the shares.
In June, JPMorgan initiated its coverage on the stock with an ‘Overweight’ rating and observed the company’s significant position in digital transformation in the construction sector.
9. Olo Inc. (NYSE: OLO)
IPO Date: March 17, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Olo Inc. (NYSE: OLO) is a B2B SaaS company that specializes in cloud-based digital ordering and delivery programs for restaurants. Olo stands for online ordering. Over 400 multi-location restaurant companies use Olo Inc. (NYSE: OLO) to manage their digital channels.
In Q1 2021, Olo Inc. (NYSE: OLO) reported a net income of $6 million and an EPS of $0.03, beating the consensus by $0.02. The consolidated revenue presented a 125% year-over-year growth at $36.1 million. In the first quarter, Olo Inc. (NYSE: OLO) deployed some of the largest restaurant brands, including Bloomin’ Brands, Nando’s U.S., Culver’s, etc. In June, Truist raised its price target on Olo Inc. (NYSE: OLO) to $42, with a ‘Buy’ rating on the shares.
8. DigitalOcean Holdings, Inc. (NYSE: DOCN)
IPO Date: Marh 24, 2021 No. of Hedge Funds Having Stakes in the Company: 22
DigitalOcean Holdings, Inc. (NYSE: DOCN) is an American cloud computing company that provides an Infrastructure as a Service (IaaS) platform for software developers. These services help the developers to test, manage, and scale applications. DigitalOcean Holdings, Inc. (NYSE: DOCN) has more than 602,000 customers in over 185 countries.
In Q2 2021, DigitalOcean Holdings, Inc. (NYSE: DOCN) reported revenue of $103.8 million, presenting a 35% year-over-year growth. Annual Run-Rate Revenue, or ARR, also grew by 36% from the prior-year quarter at $426 million. For the third quarter, DigitalOcean Holdings, Inc. (NYSE: DOCN) expects revenue in the range of $106 million to $109 million. In August, JMP Securities raised its price target on DigitalOcean Holdings, Inc. (NYSE: DOCN) to $68, with an ‘Outperform’ rating on the shares. The firm appreciated the company’s strong earnings as a public company in the second quarter. Recently, Morgan Stanley also lifted its price target on the stock to $60.
7. Squarespace, Inc. (NYSE: SQSP)
IPO Date: May 19, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Squarespace, Inc. (NYSE: SQSP) is an American IT company that specializes in website building and hosting. The company is mainly known for providing a software platform that enables millions of businesses to build their brand online. Squarespace, Inc. (NYSE: SQSP) was founded in 2003 and is headquartered in New York City.
In Q1 2021, Squarespace, Inc. (NYSE: SQSP) reported revenue of $179.6 million, up 31.25% from the prior-year quarter. For the second quarter, the company expects revenue in the range of $186 million to $189 million. Guggenheim saw the company’s potential in its commerce segment and initiated its coverage on Squarespace, Inc. (NYSE: SQSP) with a ‘Buy’ and a $70 price target in July. Similarly, BofA also initiated its coverage on the stock with a ‘Buy’ rating.
6. Sprinklr, Inc. (NYSE: CXM)
IPO Date: June 22, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Sprinklr, Inc. (NYSE: CXM) is an American software company that develops an SaaS customer experience management platform. The company has offices in 25 countries, with headquarters in New York City. It is best known for its social media management and advertising.
In FY21, Sprinklr, Inc. (NYSE: CXM) generated revenue of $387 million, up from $324 million in FY20, presenting a 22% year-over-year growth. In the fiscal first quarter of 2022, the company’s revenue stood at $111 million, with subscription revenue accounting for $97 million. In July, Morgan Stanley initiated its coverage on Sprinklr, Inc. (NYSE: CXM) with an ‘Equal Weight’ rating and a $22 price target. Analyst Tom Roderick at Stifel also appreciated the company’s unique platform for customer experience management and initiated its coverage with a ‘Buy’ rating and a $26 price target.
Sprinklr, Inc. (NYSE: CXM) raised $266 million in its IPO on June 22, and the stock has soared by 7.22% since then.
5. Confluent, Inc. (NASDAQ: CFLT)
IPO Date: June 25, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Confluent, Inc. (NASDAQ: CFLT) is a Silicon Valley software company, founded in 2014. The company offers data infrastructure which is designed to connect all technology-related aspects of companies, including applications, systems, data layers, etc. It also offers software-centric services and solutions to consumers. Confluent, Inc. (NASDAQ: CFLT) raised $828 million in its IPO on June 25, 2021.
In Q2 2021, Confluent, Inc. (NASDAQ: CFLT) reported an EPS of -$0.31, beating the consensus by $0.08. The consolidated revenue presented a 64% year-over-year growth at $88.3 million, versus estimates of $76.8 million. The company’s cloud revenue accounted for $20 million of the gross revenue.
In July, UBS initiated its coverage on Confluent, Inc. (NASDAQ: CFLT) with a ‘Buy’ rating and a $46 price target. Similarly, the company was also lauded by Citigroup due to its solid earnings in its first quarter as a public company. The investment bank raised its price target on Confluent, Inc. (NASDAQ: CFLT) to $51 from $45.
4. UiPath Inc. (NYSE: PATH)
IPO Date: April 21, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
UiPath Inc. (NYSE: PATH) is a global enterprise automation software company that helps other companies to automate their business processes. The company offers an end-to-end platform for automation and combines the robotic process automation (RPA) solution. As of April 2021, UiPath Inc. (NYSE: PATH) has over 8,500 customers located worldwide.
In the fiscal quarter of 2022, UiPath Inc. (NYSE: PATH) reported revenue of $186.2 million, up 65% from the prior-year quarter. Annual recurring revenue also increased 64% at $652.6 million. In the first quarter, UiPath Inc. (NYSE: PATH) launched a Tableau Activity in partnership with Tableau Software for customers to use the data produced by RPA. For FY22, the company expects revenue in the range of $180 million to $185 million.
In June, BMO Capital raised its price target on UiPath Inc. (NYSE: PATH) to $85, with a ‘Market Perform’ rating on the shares. The company’s ARR growth was appreciated by Truist, which kept a ‘Buy’ rating on the stock in June.
ClearBridge Investments recently released its second-quarter 2021 investor letter and mentioned UiPath Inc. (NYSE: PATH) in it. Here is what the firm has to say:
“We participated in the IPO of UiPath, a developer of software for robotic process automation that uses AI, natural language processing and design to streamline complex processes across a variety of technology environments. The company is an industry leader with a superior solution for leveraging software to optimize workloads. Organizations around the world are beginning to understand the power of automation, with momentum picking up toward fully automating business processes, a $60 billion market today that could grow to $200 billion or more by 2030. UiPath has a unique pricing model, broad partner ecosystem and thoughtful management team supporting one of the strongest growth profiles in technology. Risks we are watching include a partial cloud transition ahead and increased competition from larger software platforms over time.”
3. Coinbase Global, Inc. (NASDAQ: COIN)
IPO Date: April 14, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
Coinbase Global, Inc. (NASDAQ: COIN) is an easy-to-use cryptocurrency exchange platform. It offers a fair, accessible, and efficient financial system to its users. The company has over 56 million verified users in more than 100 countries. Coinbase Global, Inc. (NASDAQ: COIN) was founded in 2012.
In Q1 2021, Coinbase Global, Inc. (NASDAQ: COIN) generated $1.8 billion in revenue, up massively from $191 million during the same period last year. Transaction revenue amounted to $1.5 billion of the gross revenue. In the first quarter, the company also launched Coinbase Cloud as a part of its cloud-based crypto computing services.
In July Oppenheimer raised its price target on Coinbase Global, Inc. (NASDAQ: COIN) to $444 with an ‘Outperform’ rating. The firm expects strong results from the company in the second quarter as well.
Coinbase Global, Inc. (NASDAQ: COIN) went public on April 14 with shares gaining as much as 71%, up from its reference price of $250.
2. Coupang, Inc. (NYSE: CPNG)
IPO Date: March 11, 2021 No. of Hedge Funds Having Stakes in the Company: 40
Coupang, Inc. (NYSE: CPNG) is a South Korean e-commerce company with headquarters in Seoul, South Korea. Coupang, Inc. (NYSE: CPNG) holds nearly 24% of South Korea’s e-commerce market.
In Q1 2021, Coupang, Inc. (NYSE: CPNG) generated revenue of $4.21 billion, presenting a 74.7% year-over-year growth. Total Active Customers also grew by 21% from the prior-year quarter and reached 16 million. Coupang, Inc. (NYSE: CPNG) has expanded its operations in Malaysia and already operated in Japan and Tokyo. In May, Bill and Melinda Gates Foundation started building its position in Coupang, Inc. (NYSE: CPNG), with shares worth $220 million. In July, CLSA initiated its coverage on Coupang, Inc. (NYSE: CPNG) with an ‘Outperform’ rating and a $46 price target.
As of Q1 2021, 40 hedge funds tracked by Insider Monkey have positions in Coupang, Inc. (NYSE: CPNG), worth over $21.6 billion.
1. SentinelOne, Inc. (NYSE: S)
IPO Date: June 30, 2021 No. of Hedge Funds Having Stakes in the Company: N/A
SentinelOne, Inc. (NYSE: S) is an American cybersecurity company that performs with autonomous technology and is based in California, U.S. The company’s Singularity Platform is used to defend against cyberattacks and performs at a faster pace. SentinelOne, Inc. (NYSE: S) launched its IPO on June 30 and raised $1.2 billion, one of the largest IPOs of the cybersecurity industry.
In 2020, SentinelOne, Inc. (NYSE: S) reported earnings of over $93 million, up from $46.4 million in 2019. The company’s customer base grew by 62% in 2020. In the first quarter of 2021, SentinelOne, Inc. (NYSE: S) presented a 108% year-over-year revenue growth at $37.4 million. This revenue growth was appreciated by BofA, which lifted its price target on SentinelOne, Inc. (NYSE: S) to $62, with a ‘Buy’ rating on the shares in July. Morgan Stanley also suggested the rapid growth in ARR over the next years and keeps an ‘Overweight’ rating on the stock, with a $56 price target. The stock has gained 18.42% since its IPO.
