We’re just a few days into 2022, but if the recent spate of initial public offering (IPO) announcements and filings are any indication, it may be the case that 2022 shapes up on Wall Street as the year of the connected economy.
And that connectivity, as reflected in the companies that are thus far coming to market, extends across platforms, online marketplaces and even the infrastructure “nuts and bolts” that keep everything humming.
Turo, a platform that enables peer-to-peer (P2P) vehicle sharing, submitted its S-1 filing with the Securities and Exchange Commission (SEC) Monday (Jan. 10).
Turo stands as an example of an online platform that is a staple of the connected economy, where buyers and sellers meet with minimal friction to transact, settle on price discovery and interact on a continuous, 24/7 basis.
At a high level, the company has said that it is “pioneering a new category of transportation” through vehicle sharing, which enables consumers to get access to wheels as needed and for hosts to monetize assets that otherwise would sit idle in the driveway. Turo has estimated that the “serviceable” near-term market is worth as much as $146 billion.
Turo’s filing follows the December news that social media platform Reddit is moving toward going public and has already submitted a confidential statement with the SEC. The move comes after Reddit’s valuation crossed the $10 billion mark over the summer, as more than 50 million people are estimated to use the platform on a daily basis.
Nuts and Bolts Too
As for the infrastructure — the actual hardware and physical building blocks, so to speak, that make the connectivity possible — earlier this month, Credo Technology Group Holding filed to raise $100 million in a 2022 offering.
“[W]e are in the early stages of penetrating a massive opportunity,” the company, which is focused on networking, connectivity and enterprises, said in its filing. “We benefit from the strong secular tailwinds in the data infrastructure market. Within the large and growing data infrastructure ecosystem, our offerings target the wired connectivity market as it relates to communication electronics.”
The market is slated to grow from $12 billion in 2020 to $17 billion in 2025, according to the filing.
Drilling down a bit, the company makes chips and components that go into data centers and 5G networks.
As noted in the filing, “cloud workloads, already vast and expanding, the proliferation of streaming video, 5G wireless deployment, expansion of the Internet of Things (IoT) and growing adoption of artificial intelligence are creating an explosion of data which is straining existing data infrastructure and forcing paradigm shifts from transistor to system level.”
The more data and traffic that flow across networks, the more there are bandwidth barriers and bottlenecks, Credo said in the filing — and there’s a growing need for components and tools that foster faster connectivity speeds and better security.
In terms of the financials, the company said in the S-1 that through the six months that ended in October, consolidated revenues grew by 46% to $37 million. Within that top line, product sales (including the components, etc.) more than doubled year over year to $25.7 million. Operating losses shrank a bit to a recent $15.2 million from $18.6 million last year.
Among the risks, the company noted that 33% of its assets are held by entities located in mainland China and Hong Kong — and the fabrication of the company’s products are primarily located in Asia. Thus, there remains geopolitical risk, as well as the (by now not unexpected) risk that the lingering pandemic might lead to more restrictions.
These IPOs have yet to come to market, and we’ll gauge investor sentiment when they do. But in the meantime, if there’s a budding theme amid 2022’s listing announcements, it’s that the connected economy will continue to be front and center.