10 Highly-Anticipated Tech IPOs for 2013

Investment bankers are a fickle lot. When the market takes a tumble, they tell their soon-to-go-public banking clients to withdraw their plans for an initial public offering (IPO). But when the market is stable and rising, as has been the case in recent months, then they scramble back to those clients, telling them the time to complete the IPO has arrived.

As long as the market avoids an air pocket in 2013, then the coming year could prove to be a very active period for IPOs. Indeed, we’re off to a good start: There have been $5 billion worth of IPOs completed thus far this year, according to Dealogic. The tech-heavy slate of upcoming IPOs will be led this week by a debut for Xoom, a fast-growing online money-transfer service.

Here are 10 other fast-growing tech companies that are currently being cajoled by investment bankers to take the plunge. A few of them may end up in your portfolio before the year is out.

1. Twitter
Prior to going public, a company likes to be in the midst of a heady growth spurt. Strong growth can yield robust valuations, and signs are emerging that Twitter will pull off an IPO in the next 12 months, valuing the company at more than $10 billion. How does this market cap relate to the size of the business? Various reports suggest that Twitter had nearly $300 million in sales in 2012 and is likely to double its sales base in 2013, setting the stage for more than $1 billion in revenue in 2014.

For comparison’s sake, Facebook (NYSE: FB) is currently valued at roughly 10 times projected 2013 sales of $6.65 billion. A key difference: Facebook has numerous ways to monetize its platform, while Twitter’s business model has fewer tools through which to monetize.

Still, international expansion, further inroads with corporate branding efforts and mobile tweeting are the main growth drivers of the platform. In some respects, Twitter is racing against the clock, because growth will eventually slow (as the “laws of bigness” kick in), and a $10 billion IPO will be hard to pull off if Twitter’s growth rate starts to decelerate.

 

2. Gilt Groupe
Does the name Kevin Ryan ring a bell? He was the driving force behind the online advertising juggernaut DoubleClick (which was sold to a private-equity firm in 2005 for $1.1 billion). A couple of years later, Ryan launched Gilt Groupe, an e-commerce website focused on instant “flash” sales. With more than 6 million members and more than $600 million in gross annual sales, Gilt now appears to be preparing to go public. The company recently hired a new CEO to take the reins from Ryan. Michelle Peluso, who was an executive at Travelocity and Citigroup (NYSE: C), is expected to bring a bit of seasoning to Gilt before the company undergoes the scrutiny that a public debut entails.

 

3. Pinterest
Roughly a year ago, this provider of social-sharing services (also known as scrap-booking) was getting ample IPO buzz. The company’s user base was growing quickly amidst a wide range of gushing media profiles. The buzz was understandable. The company’s site had 11.7 million unique users by early 2012, making it the fastest site in history to break through the 10 million unique visitor mark, according to Comscore.com. A year later, that figure has reached 48 million.
 
By March 2012, Pinterest was considered to be the third most-popular social media website behind Facebook and Twitter. A capital injection in May 2012 valued the company at a lofty $1.5 billion. But since then, talk of a Pinterest IPO has quieted. The rumor mill suggests that the company needs to start posting impressive revenue growth rates that the IPO market craves. In the next few months, Pinterest is expected to complete another round of private financing, but later in the year, the prime may be pumped for an IPO.

 

4. Evernote
This company, which provides software that enables document synching, is taking its time to amble up to the IPO starting gate, having recently sold roughly $85 million held by early backers and employees that aimed to cash out before the IPO takes place. When the IPO finally arrives, look for strong demand from investors. That’s because Evernote already has 25 million registered users and the company has only just begun to scratch the surface of the enterprise market. Signing up major corporate clients could help sales to surge for quite awhile to come.

 

5. AirBnB
This provider of home-based lodging options has become a huge hit with consumers — and early-stage investors. The company has raised cash several times, with the most recent financing round pegging the company’s value in the $2-$3 billion range. The trouble with completing multiple financing rounds is that you accumulate an increasing number of institutional investors that want to cash out in an IPO.
 
Another catalyst for a near-term IPO: The current sales-growth trajectory is quite impressive. AirBnb booked 2 million users in June 2012 and the monthly figure is now more than 10 million. Growth should remain quite impressive in 2013 as well, but management shouldn’t wait much longer to bring this high-growth company public.

 

6. Violin Memory
Violin Memory, which makes flash storage devices, has already filed its IPO paperwork, indicating a valuation for the company north of $2 billion. But it’s becoming a crowded field, and investors are starting to sour on rivals such as Fusion-io (NYSE: FIO), which may make this a hard deal to get done.

 

7. Square
Square makes devices that turn smartphones into payment-processing devices. The company has lined up a huge list of retail partners, and though it has already raised more than $300 million, an IPO could really strengthen the balance sheet.

 

8. Dropbox
Dropbox has become one of the leading cloud-based data storage sites, thanks to a user base that now exceeds 100 million. But a tepid aftermarket performance for rivals such as Carbonite (Nasdaq: CARB) may make this one a tough sell for bankers.

 

9. Zendesk
Zendesk offers online customer support to 25,000 enterprises serving 75 million clients. The company raised $60 million in September 2012, and has dropped strong hints that an IPO will take place in 2013.

 

10. Hulu
As the war between Netflix (Nasdaq: NFLX), Amazon.com (Nasdaq: AMZN) and Coinstar (Nasdaq: CSTR) grows, this company is also emerging as a leading player in the streaming-video space. The chances of a 2013 IPO? Decent, when you consider that growth is strong now (inviting a lush valuation), but will invariably slow in coming years.

Risks to Consider: Highly-anticipated IPOs don’t always live up to their hype, as we recently learned with Facebook. It’s always wise to research each company and their latest news properly before making an investment.

Action to Take –> Each of these companies have shown promising growth, making them prime candidates for an IPO. History has shown that high-growth companies like these can be a source of quick gains if their IPOs make a welcoming market debut.

P.S. — When you get in on the ground floor of a promising new trend or technology, the profits that can follow can change your life forever. Andy Obermueller’s Game-Changing Stocks is entirely devoted to finding the next big, life-changing investing idea. See his latest report for more ground-breaking investment plays.