It’s safe to say that 2019 was rather disappointing as far as technology initial public offerings (IPOs) go.
The tech IPOs in 2019 didn’t measure up to the ones in the early part of the decade. Many of them were downright sad, with one very notable exception: Beyond Meat Inc (NASDAQ:BYND).
In 2020, the Impossible Foods Inc. IPO could replicate those astronomical gains.
First, a bit of background.
Beyond Meat, the company that is looking to revolutionize the food industry by providing meat-alternatives that taste and feel like meat without harming animals (and, as a bonus, are not as harmful to the environment) stormed onto the scene with massive gains.
It was by far the most surprising and impressive major tech IPO of the year, with BYND stock gains approaching 1,000% before falling back to Earth.
Yes, Beyond Meat stock’s run inevitably had to come to an end, and over the past few months, its share price has been falling. But that shouldn’t take away from the fact that, in the roughly eight months since its IPO, BYND stock has soared by over 200%.
Chart courtesy of StockCharts.com
There are a few reasons for Beyond Meat Inc’s success, but the most obvious one is that the company is operating in a market that many people are enthusiastic about.
Market research company The NPD Group, Inc wrote that 18% of Americans have been attempting to consume less meat. (Source: “Beyond Meat’s stock surges to all-time high,” CNBC, July 23, 2019.)
That trend is only going to grow as people become ever more health- and environment-conscious. Couple that with the fact that the farming industry hasn’t exactly been celebrated for its—at times—vicious treatment of animals and you have the perfect storm of an opportunity
Meat-alternatives are an innovation on an older product that people can’t live without: food.
And the food industry is, as you’d expect, big business. The meat-alternative sector, if it reaches its potential, has the ability to be massive. The next decade could see the meat-alternative market top $140.0 billion. (Source: “Alternative meat to become $140 billion industry in a decade, Barclays predicts,” CNBC, May 23, 2019.)
And that’s where the Impossible Foods IPO comes in.
According to anonymous sources, an Impossible Foods IPO could come as early as 2020.
Reports are that the company is looking to nab a valuation between $3.0 and $5.0 billion in its next fundraising round, possibly doubling the valuation of about $2.0 billion that it had in May. (Source: “Exclusive: Impossible Foods eyes doubling valuation with new funding,” Reuters, November 25, 2019.)
“We need to consider every option for fueling our long-term growth. However, we have not announced any plans or timing regarding an IPO,” said an Impossible Foods spokeswoman. (Source: Ibid.)
Considering that Beyond Meat, at one point, had a valuation of about $12.0 billion and has since fallen, that leaves a lot of the meat-alternative market up for grabs.
If Impossible Foods stock does hit the market in 2020, we can expect to see investors flock to it in droves. After all, nobody wants to miss out on the next BYND stock IPO.
While I doubt we’ll see the 1,000% gain in a few months that Beyond Meat stock enjoyed, shares of Impossible Foods could see massive gains in a short period. I anticipate that it will end 2020 on a high, potentially doubling early investors’ money.
One threat to the Impossible Foods IPO is if the company remains private too long or becomes overvalued. That’s exactly the problem that hurt other tech IPOs in 2019, most notably Uber Technologies Inc (NYSE:UBER).
Uber was seeking IPO valuations as high as $100.0 billion; all that for a company that hasn’t made a cent. In fact, it’s a company that continues to lose money at an alarming rate.
While Impossible Foods shouldn’t have to worry about such poor financials, there is concern that private investors will get too excited about Impossible Foods stock before it even hits the market (due to BYND stock’s performance) and shower it with private money.
If that happens, it will dramatically dampen the potential of Impossible Foods shares when they hit the public market.
But if the Impossible Foods IPO manages to land this year then I predict it will be one of the strongest tech IPOs of 2020. If the company can keep its valuation down in the lead-up to its IPO, I imagine many early investors seeing 100% gains at the very least.
With that in mind, the Impossible Foods IPO is the most exciting IPO in 2020 to me (if it does come).
Beyond Meat stock was without a doubt the strongest major tech stock IPO of 2019. That’s because Beyond Meat Inc did what tech companies have long said is their raison d’être: it disrupted.
Beyond Meat disrupted the food industry at exactly the time when many people are looking to make a change to their consumption habits. Whether for health, the environment, or the animals, more people have sought ways to forgo meat, and that’s going to keep growing in 2020.
With that in mind, BYND stock looks poised to see massive gains for years to come. And others that follow in its footsteps, like Impossible Foods, will also likely be huge beneficiaries of the growing meat-alternative market.
Therefore, the Impossible Foods IPO could be the best tech IPO of 2020. Investors do not want to miss out on the next Beyond Meat stock, and Impossible Foods stock is looking like it will offer a second shot at such exponential gains.