An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance for the first time, allowing a company to raise equity capital from public investors. Meanwhile, it also allows public investors to participate in the offering. Food IPOs offer exciting opportunities for investors, with 2021 seeing the likes of Oatly and Krispy Kreme go public. However, 2022 has been a different story.
The contrast between the market for IPOs in 2021 and in 2022 is like night and day. Last year, IPOs hit a record high, with 1,073 companies hitting public markets. In the first six months of 2022, that number plunged to just 92, according to FactSet data. Extreme volatility in the stock market combined with a series of rapid interest rate hikes has seen inflation hit its highest levels since the early 1980s, and some form of recession looks increasingly likely.
That said, several private food and beverage companies have been prepping to go public, and some may still do so in the second half of this year. Here are some of the most anticipated upcoming food IPOs to watch in 2022.
1. Impossible Foods
An IPO has been on Impossible Foods’ radar for a while, with the company first hinting at the idea in April 2021. But much like several other food IPOs to look out for in 2022, Impossible Foods has seen 2021’s window of opportunity for recently public companies shatter as investor risk tolerance continues to wane.
While Impossible Foods may be wise to wait until the latter half of 2022 for an IPO, CEO Pat Brown called going public “inevitable” as recently as November, the same month the company raised $500 million at a $7 billion valuation. When the IPO occurs, the company will make its public debut through a traditional IPO or Special Purpose Acquisition Company (SPAC) merger.
Unlike many restaurants and foodservices, Instacart ended up benefiting from pandemic-era lockdowns and the subsequent work-from-home economy that persists in 2022. But after reportedly tripling revenue to $1.5 billion in 2020, an expected slowdown in growth has gripped the company, as it tries to pivot to operations in a post-lockdown environment.
Instacart delayed plans to go public last year to focus on expanding its digital marketing business. While a July 2022 executive team shake up could point to Instacart preparing for an IPO, the company cut its own valuation by nearly 40 percent in late March in response to market conditions, making an IPO at its highest valuation of $39 billion unlikely, at least in 2022.
What started off as a tiny yogurt maker, Chobani is now contemplating a potential multi-billion-dollar valuation at IPO. However, much like Impossible Foods and Instacart, Chobani’s long-awaited IPO was delayed multiple times. Inflation fears and the Omicron variant of COVID-19 as well as market volatility caused the IPO market to slow dramatically.
Chobani’s IPO was expected to be one of the biggest of 2021, valuing the yogurt company at more than $10 billion. Chobani plans to launch its offering once the IPO market returns, likely during the second half of 2022 or into 2023. While the company has yet to disclose how many shares it would offer or their price range, Chobani plans to trade on the National Association of Securities Dealers Automated Quotations (Nasdaq) under the ticker CHO.
How 2021 Food IPOs are Performing
Oat milk maker Oatly went public in May 2021, raising approximately $1.4 billion for the company and selling stockholders in an IPO that was priced at $17 per share. In October 2021, Oatly’s stock price sank to a post-IPO low, falling 53 percent since its peak in June of that year. It would continue to fall during the following months and is currently worth around $3 per share.
Krispy Kreme went public in July 2021 in an IPO that was also priced at $17 per share. This was far below its original estimate of $21 to $24 per share, which would have raised $640 million for a valuation of $4 billion. Instead, the company received a valuation of $2.7 billion. Since its IPO, the stock price has dropped to below $13 per share at the end of October before rising to $16 as of December 2021.
While it may seem appealing to go public, it’s a risky move for both businesses and investors. However, while the IPO market is down for the time being, food IPOs are likely to make a resurgence when the market recovers.