The year 2021 has been a record-breaking year for initial public offerings (IPO). A total of 976 IPOs were listed from the start of the year through Dec. 2, 2021. That's 496 IPOs, or 103.3%, more than the total number of IPOs through all of 2020, which had broken the previous record set in 2000.
The number of public companies waned during the two-decade period between 2000 and 2020 amid a boom in mergers and acquisitions (M&A). The recent rise in IPOs has been driven largely by ultra-low interest rates and a flood of cash from government stimulus during the COVID-19 pandemic. That has helped send market valuations to record highs and has increased the attractiveness for private companies to go public. Other factors contributing to the IPO boom are startups desperate for cash and the rising popularity of special purpose acquisition companies (SPACs). SPACs are a special type of company whose sole purpose is to merge with or acquire companies to take public.
Check out the top five IPOs, or direct listings, by their returns. We measured each by its performance since the shares were first listed this year through Dec. 2, 2021. Stocks with a market cap less than $1 billion were excluded from the list.
- There was 103.3% increase year over year in the number of IPOs in 2021.
- The rising popularity of SPACs has led, in part, to the boom in IPOs this year.
- The Digital World Acquisition Corp. SPAC, which has seen the highest increase in returns, has plans to take former U.S. President Donald Trump's Media & Technology Group Corp. public
- IPO Price: $10.00
- IPO Date: Sept. 3, 2021
- Return as of Dec. 2, 2021: 371.1%
- Market Cap as of Dec. 2, 2021: $1.4 billion
- Revenue as of last reported fiscal quarter: $0.00
Digital World Acquisition is a SPAC, also known as a "blank check company," which was formed on Dec. 11, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. On Oct. 20, 2021, the company entered into a merger agreement with its wholly-owned subsidiary DWAC Merger Sub Inc., former U.S. President Donald Trump's Trump Media & Technology Group Corp. (TMTG), ARC Global Investments II LLC, and TMTG's chief legal officer. Upon completion of the merger, shareholders of DWAC will become shareholders of TMTG, the newly formed public company. Trump, who is chairman of TMTG, plans to use the company to build a media and technology company focused on social media, digital streaming, and more.
The planned merger is the focus of newly opened investigations by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. The probes were disclosed on Dec. 6, 2021 in a regulatory filing by DWAC. The two regulators are looking for information regarding the trading of Digital World shares, and the SEC is also looking at documents and communications between Digital World and Trump Media, according to The New York Times. More specifically, a number of media outlets have reported that Trump and Digital World's Chief Executive Officer (CEO) Patrick Orlando met earlier this year before the SPAC had raised any money. If the discussions between Trump and Orlando, which were not disclosed in DWAC's prospectus, are found to be material, representing significant talks about a merger deal before money was raised by the SPAC, the discussions could be in violation of SEC rules.
On Dec. 6, 2021, TMTG announced that U.S. House Representative Devin Nunes of California would be resigning from Congress at the end of the year in order to join TMTG as its CEO beginning in January 2022.
Past performance is not necessarily an indicator of future success.
- IPO Price: $15.00
- IPO Date: Jan. 28, 2021
- Return as of Dec. 2, 2021: 265.5%
- Market Cap as of Dec. 2, 2021: $6.5 billion
- Revenue as of last reported fiscal quarter: $3.1 billion
ZIM Integrated Shipping Services is an Israel-based container shipping company that operates across the world's major trade routes. The asset-light shipping company provides seaborne transportation and logistics services. As part of its strategy, for example, ZIM operates 88 vessels, but it owns only one. ZIM went public during a challenging time for the global shipping industry as a spike in demand for goods relative to services during the COVID-19 pandemic caught the industry off guard. Resulting logjams at ports have caused shipping delays across global supply chains. ZIM took the disruptions as an opportunity to promote its flexibility and agility as an asset-light shipping company to attract investor cash through an IPO. The company's stock closed its first day trading down 26.5% from its IPO price.
- IPO Price: $17.00
- IPO Date: Aug. 6, 2021
- Return as of Dec. 2, 2021: 173.5%
- Market Cap as of Dec. 2, 2021: $5.2 billion
- Revenue as of last reported fiscal quarter: $0.00
Adagio Therapeutics is a clinical-stage biopharmaceutical company focused on discovering and developing antibody-based solutions for infectious diseases with pandemic potential. Its initial focus is SARS-CoV-2, the virus that causes COVID-19. The company began clinical trials of its lead product candidate, ADG20, in February 2021. Adagio intends that ADG20 be used to both prevent and treat COVID-19. The company has not generated any revenue as of its latest quarterly filing with the SEC for the quarter ended Sept. 30, 2021. It said that its operations have primarily been financed by sales of preferred stock and from capital raised in its IPO, which took place in August. Adagio said that it does not expect to generate any revenue from product sales until it has successfully completed clinical development and obtained marketing approvals or emergency use authorization (EUA) for one or more of its product candidates. The company's stock closed its first trading day 22.8% above its IPO price.
- IPO Price: $45.00
- IPO Date: Mar. 10, 2021
- Return as of Dec. 2, 2021: 159.8%
- Market Cap as of Dec. 2, 2021: $67.7 billion
- Revenue as of last reported fiscal quarter: $509.3 million
Roblox is an entertainment and communication company that operates what it calls a "human co-experience platform." The platform allows users to interact with one another to explore and develop immersive, user-generated 3D experiences. Users who sign up for the platform can personalize their own Roblox identity, or avatar. They also can purchase virtual currency called "Robux" in order to obtain virtual items from the company's Avatar Marketplace to enhance their experience on the platform. The company said that its own business plan predicted the rise of the "metaverse", the expansive virtual world that Chief Executive Officer (CEO) Mark Zuckerberg wants to build at his company, Meta Platforms Inc. (FB), formerly known as Facebook. Instead of an IPO, Roblox went public through a direct listing, or direct public offering (DPO), on the NYSE. Companies that do a direct listing issue their shares directly to the public rather than using intermediaries, such as investment banks, broker-dealers, and underwriters. The direct-listing route significantly reduces the cost of capital for the company because it no longer has to pay the intermediaries. Roblox's stock closed its first day of trading up 54.4%.
- IPO Price: $26.00
- IPO Date: June 24, 2021
- Return as of Dec. 2, 2021: 159.7%
- Market Cap as of Dec. 2, 2021: $12.7 billion
- Revenue as of last reported fiscal quarter: $79.4 million
Doximity is a digital platform that provides tools allowing U.S. medical professionals to collaborate with colleagues, securely coordinate patient care, conduct virtual patient visits, stay current with the latest medical news and research, and more. The company's network of members includes more than 80% of U.S. physicians across every state and medical specialization. The importance both of healthcare and online digital platforms has been underscored by the COVID-19 health crisis. Offering an online platform for medical professionals during the pandemic has helped to accelerate Doximity's growth. The company went public via an IPO in June. Its stock closed its first trading day 103.8% above the IPO price.
Other Noteworthy IPOs
The year has included a number of high-profile IPOs, including online discount brokerage firm Robinhood Markets Inc. (HOOD), Swedish milk company Oatly Group AB (OTLY), and Chinese ride-hailing app Didi Global Inc. (DIDI). The performance of these IPOs has varied widely. Many IPOs' share prices have plunged below their listing price. Didi's stock even plummeted after it recently announced plans to delist its shares from the New York Stock Exchange (NYSE) and to list in Hong Kong. Didi was under pressure from the Chinese government to make the move. Other IPOs, however, have fared much better.
The Bottom Line
The top five IPOs in 2021 reflect several major themes that investors have focused on in recent years, most recently in response to the pandemic. Those themes include healthcare, digital services, and supply chains. In the healthcare field, Adagio Therapeutics is working to develop drugs to prevent and treat COVID-19 and other diseases that have pandemic potential. Doximity spans both the healthcare and digital services themes, providing an online platform for medical professionals to collaborate and even conduct virtual meetings with patients. Supply chain disruptions over the past year have highlighted the need for creative and flexible shipping companies like ZIM. Virtual platform Roblox and Digital World Acquisition, which is expected to merge with Trump's media company TMTG, again underscore the rise of digital platforms. These five IPOs have ridden a wave of investor optimism about these themes, as well as benefiting from the flood of government stimulus cash and low interest rates. Those combined forces have enabled these companies to raise capital for their future growth in one of the best IPO markets in decades.