Every so often, I like to look to see how successful investments in initial public offerings (IPOs) have been.
On this occasion, I'm going to look at how a $10,000 investment in Kogan.com Ltd (ASX: KGN) shares would have fared. Here's what I found:
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The Kogan IPO
Kogan has now been listed on the Australian share market for just under five years. The ecommerce company's shares landed on the ASX boards on 30 June 2016 at a listing price of $1.80 per share.
This means that if you bought $10,000 worth of Kogan shares at its IPO, you would have ended up with approximately 5,556 shares in your portfolio.
How has Kogan performed?
Kogan has been a very strong performer since its IPO, delivering stellar sales and earnings growth over the period.
For example, upon listing, Kogan was generating sales of $200 million and aiming to increase this to $240 million in FY 2017.
If we fast-forward to today, Kogan has recently released its half year results and revealed that its gross sales came in at $322.9 million for the six months.
Underpinning this strong growth has been the shift online, acquisitions, the success of Kogan Marketplace, and the launch of countless new verticals such as Kogan Cars.
Where are its shares today?
Interestingly, Kogan had a terrible start to life as a listed company. The Kogan share price fell as much as 17% before closing at $1.50 on day one.
Pleasingly, investors that took part in its IPO and held firm during the day one sell off have been rewarded handsomely thanks to its impressive sales growth.
This afternoon the Kogan share price is fetching $12.69. This means that the 5,556 shares you would have picked up at its IPO now have a market value of $70,500.
Where next for the Kogan share price?
The good news for shareholders is that the gains may not be over, according to one leading broker.
A recent note out of Credit Suisse reveals that its analysts have an outperform rating and $20.85 price target on its shares.
If the Kogan share price were to rise to this level, those 5,556 shares would be worth a sizeable ~$116,000.
Overall, this demonstrates why investing in IPOs can be worth considering as part of a balanced portfolio.
