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MyDeal (ASX:MYD) share price rockets 120% higher following IPO

Rocket launching into space
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The Limited (ASX: MYD) share price has had a sensational start to life on the Australian share market.

The online retail marketplace provider’s shares rocketed 120% higher than its IPO price of $1.00 to $2.20 this morning.

The MyDeal share price has since pulled back a touch but is still up 83% for the day to $1.83.

The MyDeal IPO.

MyDeal hit the ASX boards this morning after successfully completing its initial public offering that raised $40 million at $1.00 per share.

The $40 million comprises $35 million for the company and $5 million for certain existing shareholders.

Based on this and its existing shares, this gave the company a market capitalisation of $258.8 million. Though, with its shares now changing hands for $1.83, MyDeal has a market capitalisation of $475 million.

What will it spend the proceeds on?

According to the release, the company intends to use the proceeds from the IPO to drive future growth.

This includes growing MyDeal’s private label business, investing in its proprietary technology (the development and launching of mobile apps for iOS and Android devices), and investing in advertising to grow its customer base and brand.

MyDeal’s CEO and Managing Director, Sean Senvirtne, commented: “This is a very exciting day for MyDeal, and I am delighted with the strong support that we received from both institutional and retail investors. Today is an important milestone for MyDeal, however, this is still the beginning of our journey. I would like to thank our long-term shareholders for their ongoing support, and welcome new shareholders to be part of the exciting journey ahead of us.”

Trading update.

As with fellow ecommerce companies Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW), MyDeal has started FY 2021 strongly.

Gross sales for the first quarter came in at $56.67 million, up 317% on the prior corresponding period.

Also growing strongly was its active customers. MyDeal now has 669,897 active customers, which is an increase of 268% since this time last year.

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Returns as of 6th October 2020

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended ltd and Temple & Webster Group Ltd. 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 Scott Phillips.

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