On Friday the Atomos Ltd (ASX: AMS) share price marked its debut as a listed company in style. It rose 22% to close the day at 50 cents.
While that was impressive, its second day on the ASX since its IPO has been even better.
At one stage today the global video technology company's shares were as much as 60% higher at 80 cents, meaning its shares had almost doubled from its listing price of 41 cents.
They have since dropped back a touch, but still sit 50% higher at 75 cents at the time of writing.
What is Atomos?
Atomos is a global video technology company that enhances video content creation by producing products that connect the imaging and computer worlds together.
It achieves this through the design, development, and commercialisation of award-winning, simple to use monitor-recorder products that ensure content creators consistently have access to the latest video monitoring, processing, and recording technologies, regardless of how advanced the camera or production equipment they use.
Users of its products include but are not limited to live news broadcasters, YouTubers, short film makers, corporate marketers, and live streamers.
In light of this, management believes the company is well-positioned to profit from the forecast growth in original content spending and the rise in professional-amateur content creators.
In respect to the former, the company notes that Netflix, Amazon and Apple are expected to grow their combined budgets for original content from US$5 billion in 2017 to over US$22 billion in 2022 as competition for viewers increases.
The increased demand for high-quality entertainment content is expected to further drive the global camera and video equipment market.
It is a similar story for professional-amateur content creators that have regular production schedules and profit motives. As more and more entertainment is consumed on mobile devices via platforms like YouTube, these professional-amateurs are expected to be an important driver of the global camera and video equipment market.
How is the company performing financially?
Unlike many other small cap tech shares like LiveHire Ltd (ASX: LVH) and Yojee Ltd (ASX: YOJ), Atomos is already generating significant sales.
In FY 2018 the company reported pro forma sales of $35.65 million. This year sales are expected to increase 18.5% to $42.25 million. On the bottom line management expects to post a pro forma loss before interest and tax of $1 million.
Should you invest?
With a forward price to sales ratio of just under 2x, I think Atomos is about fair value now if it can maintain its current growth rate and become profitable in FY 2020.
This could make it worth keeping a close eye on along with fellow fast-growing tech equipment company Audinate Group Ltd (ASX: AD8).
