After a tepid year in the IPO market, investors are hoping 2024 will bring a return to form. 2020 and 2021 were record years for deals, as low lending rates boosted investor interest in startups like Rivian Automotive, Robinhood and Snowflake. However, the IPO market cratered in 2022 after the Federal Reserve’s aggressive rate hike campaign crushed investor demand for growth stocks. Take Rivian, for example. In 2021, the electric truck maker opened above $106 a share on its first day of trading as investors piled into the startup backed by the likes of Amazon and Ford. It has since retreated and is trading around $15 per share. However, happier days could be ahead for the IPO market in 2024. Companies that debuted last year received a mixed reception, but investors are hopeful that the Fed’s rate cuts expected later this year will mean an uptick in IPOs and they will eventually pave the way for a recovery in trading activity. According to Linqto’s 2024 IPO Survey released on Thursday, just over 52% of the 2,500 marketers surveyed expect a significant recovery in the IPO market this year, suggesting “cautiously optimistic” going forward. “There is a lot more optimism about the IPO market,” said Akshata Bailkeri, head of research at EquityZen, a platform for pre-IPO activity. “2023 was definitely a very different kind of environment. With the rate hikes and what was happening macro-economically and geopolitically, obviously, there weren’t as many IPOs and companies willing to IPO.” “But I think we come into 2024 on a much stronger footing,” Bailkeri said. The Power of Consumer Brands In the past, the IPO market was saturated with technology offerings, venture capital-backed companies from Silicon Valley touting software-as-a-service offerings. Many expect this to continue, especially as AI gains prominence as a topic, starting with robotics and automation startups. But the hottest IPOs this year could be in consumer companies, with Shein, the Chinese fast-fashion giant, and Amer Sports, the maker of Wilson tennis rackets, declaring ambitions to go public. These companies can take advantage of names that retail investors easily recognize to create buzz around an IPO. “Brand awareness provides some accessibility to how people can view the company and the IPO,” EquityZen’s Bailkeri said. “So that’s potentially a lens in which they’re thinking, ‘Okay, people know us, they know what we do, they know what our business model is and what we offer to the public.’ well-known products that people use every day,” Bailkeri added. Here are some companies that could go public next year. Shein Late last year, Shein filed confidentially to go public, preparing for a debut that would could happen as soon as this year, CNBC reported. The Chinese fast-fashion retailer was last valued at $66 billion, though that could change. “We don’t know exactly where Shein will decide to value himself, but there is talk that it’s going to potentially go a little bit higher than that current $66 billion valuation,” Bailkeri said. “So that’s an interesting story there.” To be sure, Shein also faces increased scrutiny from U.S. lawmakers because of its ties to China and has faced accusations of violating labor laws. Reddit Another major market debut would be from the social networking platform Reddit. This week, Reuters reported that the discussion forum platform plans to launch an IPO in March, an effort that would be in the works for three years. Reddit confidentially filed for an IPO in 2021. At the time, it was valued at around $10 billion. Reuters, citing sources, said the company will sell about 10 percent of its shares in its IPO and settle on a valuation as it nears its debut. Fanatics Fanatics, the American manufacturer and retailer behind licensed sportswear for the National Football League, Formula 1 and other properties, is another consumer company that has declared its ambitions to go public. Recently, the company announced Andrew Low Ah Kee, former president of online real estate platform Opendoor Technologies and head of GoDaddy, as CEO of Fanatics Commerce. In his previous roles, Low Ah Kee pushed businesses into new markets and brought on new partners. It’s the kind of appointment that EquityZen’s Bailkeri noted a company makes when it expands its C-suite to prepare for a public debut. It is known turf for Low Ah Kee. While at Opendoor, the company made its public debut in 2020 through a special purpose acquisition company, or SPAC. Opendoor shares have been trading well below their offering price this year, with the stock down 34% so far in January. Skims Skims, the clothing brand co-founded by Kim Kardashian, also recently appointed Andy Muir as CFO. Muir comes to Skims from Nike, where she worked with Jordan Brand. Other consumer names that have made public ambitions include Amer Sports, the company behind Wilson tennis rackets, is seeking a $1 billion IPO by the end of January, Reuters reported this week citing sources. Liquid Death, a canned water company, and Golden Goose, a sneaker company, are also reported to be potential IPO candidates in 2024. To be sure, the companies’ performance may depend in part on how resilient the consumer is in 2024, he warned Roxanna Islam, head of sector and equity research at VettaFi, a data analytics firm. Instacart’s parent company, Maplebear, for example, was poorly received last year, down more than 7% in 2023. It’s up 9% so far in 2024. ‘Sustainable profitability’ Of course, companies now have more options to pump capital outside of a traditional IPO, which some investors say could also limit IPO purchases in the future. For example, companies that want to stay private longer could explore a potential sale or tap into secondary markets. In fact, Troy Gayeski, chief market strategist at FS Investments, pointed to data from the US Census Bureau and the World Bank showing that the share of public companies has declined by 35% since the mid-1980s, while the share of private companies has grown by 43% over the same time period. At the same time, only 4 percent of U.S. companies are public, highlighting the opportunity in private markets, Gayeski said. “Ultimately, why do you go public? You need capital to grow your business, right, that’s the motivation,” Gayeski said. “But if there are both private investors and private credit lenders, not only do you not need to source equity capital from the public markets, but you don’t need to source debt capital from the public markets.” As it stands, companies looking to debut this year will find the market completely different than it was just a few years ago, when many companies over-promised what they could deliver. Experts warn that investors pay more attention to startups with solid balance sheets, healthy growth expectations and customer relationships, as well as the right management teams in place. In other words, companies will have a higher threshold to liquidate and will have to defend their valuations, in a world of higher interest rates. “We’ve kind of gotten away from that high-reward—short-term, high-reward—seeking behavior,” VettaFi’s Islam said. “I think we’re looking more towards companies that have sustainable profitability.” However, how IPOs perform this year may ultimately be about how early movers perform, as their reception may indicate how followers will fare. “When one does really well, that kind of leads to a lot more,” EquityZen’s Bailkeri said, adding, “That’s what we would be looking for.”