This month I have been looking at what would have happened if you had invested $10,000 into the IPOs of some of the most popular ASX shares.
The last one I wrote about, which can be found here, was the Kogan.com Ltd (ASX: KGN) IPO.
Spoiler alert. The ecommerce company's shares have been very strong performers since their IPO in June 2016.
Today I thought I would turn my attention to the Appen Ltd (ASX: APX) IPO.
The Appen IPO.
Appen is a leading provider of language technology data and services. It provides or improves data that is then used for the development of machine learning and artificial intelligence products
Its shares landed on the ASX boards just over five years ago in January 2015. The company raised $15 million at an offer price of 50 cents per share, which gave it a market capitalisation of approximately $47.3 million. This means that a $10,000 investment would have got you $20,000 shares at its IPO.
Management told investors that the funds raised would help it "take advantage of, and grow with, the recent acceleration of devices and technology that interact with humans on human terms and advances in mobile communications and social media that are driving unified communication in any language and across languages."
Stellar growth.
Well, management certainly delivered on its prospectus promises and more.
Since its IPO Appen has gone from strength to strength, culminating in the company delivering revenue of $536 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of $101 million in FY 2019.
But it isn't stopping there. Last month Appen released a market update which revealed that it remains on course to achieve its FY 2020 guidance despite the pandemic. It expects underlying EBITDA in the range $125 million to $130 million, which represents a year on year increase of 23.8% to 28.7%.
The high end of its EBITDA guidance is a massive 175% greater than its market capitalisation at listing. I believe this demonstrates just how quickly the company has grown.
Unsurprisingly, this has led to its shares rising very strongly since its IPO. At the time of writing they are changing hands for $30.59, which is within sight of their all-time high of $32.00. This gives it a market capitalisation of almost $3.75 billion.
Which means that the 20,000 shares you would have picked up at Appen's IPO now have a market value of approximately $612,000.
Overall, I believe this demonstrates how rewarding it can be to invest in shares with quality business models, strong growth potential, and talented management teams.
