Some recent IPOs have had a horrendous time since they listed late last year, including online furniture retailer Temple & Webster Group Ltd (ASX: TPW) and meat processor and exporter Wellard Limited (ASX: WLD).
The companies have seen their share prices drop by 76% and 81% respectively since listing in December 2015.
They aren’t alone either. Building IQ, Inc (ASX: BIQ) has seen its share price crash 87% to 13 cents, while Digimatic Group Ltd (ASX: DMC) shares are down 70%. Millenium Services Group Limited (ASX: MIL) and Buddy Platform Ltd (ASX: BUD) have both lost around 46% of their value since they listed.
It’s probably too early to call them outright failures, but their respective management teams have plenty of hard work ahead of them if they are even to survive.
By comparison, the following 10 companies have seen their share prices go close to double or more.
|Company||Last Price||Market Cap ($m)||Gain|
|IOT Group Limited (ASX: IOT)||$0.03||$3.1||361.5%|
|Voltage IP Limited (ASX: VIP)||$0.17||$93.6||201.7%|
|zipMoney Ltd (ASX: ZML)||$0.82||$85.7||189.5%|
|Class Ltd (ASX: CL1)||$3.50||$286.0||149.6%|
|iBosses Corporation Ltd (ASX: IB8)||$0.45||$7.0||125.0%|
|BWX Ltd (ASX: BWX)||$4.67||$427.7||109.7%|
|Soon Mining Ltd (ASX: SMG)||$0.32||$10.3||105.6%|
|Over The Wire Holdings Ltd (ASX: OTW)||$2.70||$117.5||103.8%|
|XPED Ltd (ASX: XPE)||$0.04||$53.9||100.0%|
|PSC Insurance Group Ltd (ASX: PSI)||$1.98||$446.2||98.0%|
Source: S&P Global Market Intelligence. Note: gains are since first closing day rather than IPO price
It’s fairly clear to me that several of those companies are likely to have a long stay on the ASX, while a number will be lucky to survive beyond the next few years despite the positive news so far.
Of the companies with a bright future, I nominate Class Ltd, BWX Ltd, Over The Wire Holdings Ltd and PSC Insurance Group, mainly because they are all already profitable. Some of the other companies may be close, including zipMoney, but others may never make a profit in their lifetimes.
It often pays to avoid IPOs until they have a few years’ track records on the ASX before investing in them.
The Motley Fool Australia has a position in Class Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.