to list on the ASX

Outsourcing website raises 15 million in small listing.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More, the online job outsourcing company, will float on the ASX on November 15 and aims to raise a tiny $15 million, giving up only 6.9% of the company to the public. The remainder will stay with the three current directors, CEO Matt Barrie (46%), Director Simon Clausen (38.5%) and CTO Darren Williams (2.95%).

The listing, of 30 million shares at 50 cents each, will value the company at $218 million, far less than the reported $400 million that global recruitment company offered for Freelancer in September.

It will be one of only a few listed technology stocks on the ASX, and will be under significant pressure from day 1 to live up to the hype. Freelancer will float on a forward price-to-earnings ratio of 463 at the listing price. This is obviously a huge number when compared to the 12-15 P/E of the banks, and even the 70-odd P/E of listed Asian property website iProperty (ASX: IPP), however CEO Matt Barrie believes it's justified. Mr Barrie compared his company with other rapidly growing companies such as LinkedIn, which currently trades at over 900 times, and recently listed accounting software provider Xero (ASX: XRO) which has yet to turn a profit but has tripled in price since listing.

Freelancer will be targeting aggressive revenue growth over profit growth in the next few years and doesn't plan on paying a dividend any time soon. Mr Barrie noted the huge potential, saying that one company in the industry would one day be as big as Amazon (NASDAQ: AMZN) or Ebay (NASDAQ: EBAY), especially as the developing world slowly comes online. The prospectus references the US census bureau which believes that 60% of the world's population is yet to use the internet. It's these people that Freelancer hope will help rapidly grow its 9 million-user customer base in the years to come.

The float of follows a number of other high-profile floats this year, including the trouble-plagued iSelect (ASX: ISU) IPO, and the successful floats of 99wuxian (ASX: NNW) and OzForex (ASX: OFX). 99wuxian and OzForex are up 13.3% and 25% respectively, while iSelect has dropped around 20% so far.

Foolish takeaway

IPOs on the ASX this year have received a mixed reception, however the standouts have performed exceptionally so far. Freelancer may be one of these that outperforms as the small amount of shares on offer will constrain the supply and push up prices if demand is strong. Additionally, the prospectus forecasts strong revenue growth and a desire to push into developing countries in the near future. Like any IPO, investors should carefully consider the outlook for the company and how likely it is to hit its forecasts, investors in iSelect have seen recently how quickly shares can be sold off on bad news from an IPO.

Like many newly listed stocks, Freelancer won't pay a dividend for some time. Those looking for a stock paying a big dividend should discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading

Motley Fool contributor Andrew Mudie does not own shares in any of the companies mentioned.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »