Access IPOs follows the latest business news to anticipate upcoming IPOs potentially available to ordinary investors. Recent IPO rumblings of three specific companies have caught my eye. All three fit the mold of potential investable IPOs.
Put these three companies on your radar between now and the end of the year. You can keep an eye on them by utilizing my recommended IPO research tools, and watch your inbox for those coveted IPO opportunity emails.
Also, follow me on Twitter for the latest.
This post goes over each IPO and why they are worthy of extra attention. I’ll also provide a few action items that may increase your chances of participating.
Step one of investing in an IPO is recognizing there may be an opportunity. Step two is attaining access to that opportunity.
Be Ready For the Next Opportunity
There are a few ways to be prepared for upcoming IPOs. One is to have accounts open with Motif Investing and Loyal3. These are the two main brokers that offer IPO access to individuals, regardless of account balance. And equally important, access to IPO opportunities at both brokerages is first come, first served. No favoritism for wealthy clients.
Loyal3 has proven this with numerous accessible IPOs.
Whether you have accounts set up or not, definitely make sure you’re on both email lists. You can always open an account on the fly when an opportunity opens up (but it will slow you down).
Once you’re on the email lists, you’ll be notified when an investable opportunity is live.
Another way to prepare for IPO access is to be a customer of a company expected to IPO. For example, when GoPro IPO’d in 2014, an email offer to participate was sent to its 1.3 million person email list. Of those, 16,500 email recipients actually participated in the IPO. (Click here to read more about this; the third story down).
After a short period of exclusive access for customers who received the email, the IPO was open to Loyal3’s IPO list. The balance of GoPro shares was completely reserved in less than an hour.
The Blue Buffalo IPO on Loyal3 followed a similar pattern.
In both cases, people on the email list got first dibs, leaving few shares to the general public.
So one simple and low-commitment action I suggest you take is to get on email lists for potential IPO candidates. I recommended this strategy first for The Honest Company. No IPO yet, but if they offer shares to customers, subscribers to their special offers list may be included.
Three Upcoming IPOs to put on Your Radar
The three IPOs below were singled out because of their customer-centric business models and well-established fanbases. They are companies that I believe would benefit from offering shares to customers, fans, and to the greater public. Doing so would build brand loyalty and provide some publicity.
First up is YETI. YETI makes awesome ultra-rugged coolers for outdoor enthusiasts. Their coolers can stand up to the toughest outdoor challenges, and consumers are showing a willingness to pay a premium for indestructible ice chests.
The company’s flagship product is the YETI Tundra which comes in a variety of sizes. They also sell a YETI Roadie and a soft “Hopper” Cooler among various accessories. Click those red links to take a closer look at these products.
What YETI is really selling is a lifestyle brand. I see a lot of similarities to GoPro in this brand. Nick Woodman, the CEO of GoPro, has stated his admiration for the way Red Bull grew itself to be much bigger than just a drink. That’s what GoPro is aiming for…
And I think YETI is too. Just check out the epic imagery on their website. Especially the stories. It’s all about rugged dudes doing cool shit.
Of the three companies, YETI is the furthest along in the process as it has already filed an S-1 with the SEC on July 1st. Bank of America and Morgan Stanley appear to be the lead underwriters. That leaves out JPMorgan and likely Motif Investing, unfortunately. But I think Loyal3 has an excellent shot at this one considering the success that GoPro had with their IPO and the similarities in branding.
Notice on page 9 of the S-1 a “directed share program”. The directed share program is where the company discloses it is setting aside shares for certain people. This could be executives, employees, the family of employees, affiliates, or partners. It applies to us when it says customers or the general public. In this early filing, most of the details are left out. As the IPO gets closer, amended filings will be submitted and we’ll learn more.
We’ve seen this a number of times before, most notably the Square IPO. And plenty of IPOs don’t have a directed share program at all. So it’s a great sign. But it’s not a promise. They could offer shares to employees only, and skip the customers and the general public.
Ideally, we’ll see Loyal3 added as an underwriter as the IPO date approaches. So keep an eye out for S-1 amendments in the Access IPOs S-1 feed.
In the meantime, there’s no harm in signing up for the YETI email list. Better yet, buy something and become a direct customer. It’s a low-commitment way to possibly increase your chances of participating in the IPO. “Become a YETI native” and sign up for their email list at the bottom of the home page.
The company behind Hostess treats went bankrupt in 2012 causing a pause in production and a run on Twinkies. Now owned by private equity companies Gore Group, Apollo Global Management and C. Dean Metropoulos, an announcement was made on July 5th about a forthcoming $2.3 billion IPO.
There’s no guarantee Hostess Brands shares will be available to ordinary IPO investors or the general public (there never is). Private equity firms have a lot of investors and relationships that are always looking for an investing edge.
But the run on Twinkies during the bankruptcy and the subsequent social media outpouring of Twinkie love showed there is a strong customer fan base of these iconic brands. So I think there’s a chance we see an IPO opportunity here to help to strengthen the love of processed baked snacks. Though I believe this is the least likely of the three.
I’m recommending readers sign up for the Hostess “Sweet List” email list. The Sweet List “Twinkie promises”:
New-product announcements, special offers, and other exclusives. Just fill out the required fields. And remember, we will never use this information for any other reason than to share the Hostess love with you. We don’t just promise. We Twinkie™ promise.
This company would make a delicious addition to the stocks available on Loyal3. Hopefully, Loyal3 gets the chance to pitch the private equity companies on the value proposition of IPO access to customers, fans, and the general public. Making an IPO available to product fans is a great way to expand customer loyalty and brand engagement.
Lastly, according to Bloomberg, Swedish music company Spotify is aiming to go public this year. Earlier in 2016, the company took on $1 billion of convertible debt that is tied to a future IPO (explained here), making this IPO more likely in the coming months.
Spotify is a streaming music service with more than 30 million paying customers. They offer a free service that comes with limitations and advertisements, and a popular premium subscription model for about $10.
Spotify faces a lot of challenges with paying royalties to artists, and the business has lost money each of its ten years of existence. But that doesn’t mean it won’t excite investors.
Since the company is only as strong as its subscriber base, the company would benefit from new ways to solidify the bond with customers. If Spotify was to offer access to its IPO, presumably it would be to paying customers first. Offering IPO shares to paying customers would thank them for the support and strengthen the relationship.
As we saw with T-Mobile and it’s customers, the future of customer loyalty may be paved with stock ownership.
So if you are a subscribing Spotify customer, keep an eye on the developing IPO. Since Spotify has 30 million or so paying customers, I see it as unlikely that they open the IPO up to the greater public. But I still think there is a decent possibility for IPO access for paying subscribers. In hopes of joining in the IPO fun, you could always sign up for free Spotify account or become a paying subscriber. For $10 per month, it might be worth it.
As aspiring IPO investors who lack multi-million dollar portfolios and A+ brokerage treatment, we need to be ready for any opportunity that may come within our reach. Simply sitting back and waiting for that next IPO access email isn’t enough. We need to look into the IPO pipeline and analyze what deals make sense for opening up shares to customers and the greater public.
That way, as we follow the IPOs along their path to being public, we’ll know when to expect that email giving us the chance to sign up for the next IPO opportunity. This is important because sometimes that window is very short. If you’re unprepared, you might miss out.
The first half of the year was lousy for IPOs. But we’ve seen some glimpses of IPO excitement, so it’s only a matter of time before we get our next shot at reserving shares. These three companies are some of the best-looking ideas in this limited IPO marketplace.
While our chances aren’t great, we can possibly improve our odds of getting the opportunity to invest in one of these companies ready to jump into the open markets. Just by signing up for an email list. It’s a free and minor action to take to put ourselves in the running.
Are any other upcoming IPOs on your radar?
Disclosure: The author does not own shares in any companies mentioned in this article.