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Are These Recent IPOs Worth Investors' Attention?

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Several exciting IPOs have emerged over the last year, reflecting renewed confidence in the investment landscape overall. 2021 was a record year for IPOs, although the trend has slowed considerably since.

And concerning the last year, both Reddit (RDDT - Free Report) and Arm Holdings (ARM - Free Report) reflect two of the most famous IPOs we’ve seen.

Given the barren IPO landscape, are they worth investors’ attention? Let’s take a closer look at each company.

Arm Holdings

Arm Holdings constructs, develops, and licenses high-performance, low-cost, energy-efficient IP solutions for CPUs, GPUs, NPUs, and other interconnected technologies. The stock is a Zacks Rank #1 (Strong Buy), with analysts revising their earnings expectations positively across the board amid the AI frenzy.

Zacks Investment Research
Image Source: Zacks Investment Research

The company’s product portfolio is relied upon by many high-profile semiconductor companies and other original equipment manufacturers (OEMs). Interestingly, a 13F filing revealed that beloved NVIDIA (NVDA - Free Report) has a nearly $150 million stake in the company.

ARM’s latest set of quarterly results caused shares to soar post-earnings, exceeding the Zacks Consensus EPS estimate by 16% and reporting a 7% sales beat. Royalty revenue reflecting a quarterly record, with strong growth in licensing also providing favorable tailwinds.

Zacks Investment Research
Image Source: Zacks Investment Research

The stock represents a prime selection for those interested in AI exposure, with positive earnings estimate revisions providing fuel for the bullish move to continue.

Reddit

Reddit’s IPO had long been foreshadowed, with rumors bouncing around for some time. It’s an exciting move for those bullish on the long-term picture of social media, reflecting the first IPO among social media companies in years.

Two other social media companies, Pinterest (PINS - Free Report) and Snap (SNAP - Free Report) , have seen their shares move higher over the last year, though it’s worth noting that both have underperformed relative to the S&P 500 in this timeframe.

Zacks Investment Research
Image Source: Zacks Investment Research

Shares have seen rollercoaster-type price action since the debut, initially spiking before pulling back over recent days. The social media company’s platform has an extensive reach, with over 100k active communities and 1 billion cumulative posts.

Like other social media companies, Reddit will be generating revenue from advertising solutions based on user engagement. In fact, the company estimates a total addressable market of $1.4 trillion by 2027. Further, the company recognizes potential within data licensing thanks to the growth of LLMs.

Bottom Line

While IPOs have slowed considerably from record levels in 2021, we’ve still seen several interesting companies debut over the last year, including ARM Holdings (ARM - Free Report) and Reddit (RDDT - Free Report) .

Thanks to the AI frenzy, analysts have been bullish on ARM’s outlook, landing the stock into a favorable Zacks Rank #1 (Strong Buy). Concerning Reddit, the company plans to tap into the advertising market, also expecting tailwinds from data licensing.

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