This ASX share just dived 25% following its IPO. What happened?

Not all floats rise to the top…

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A new company finalised its initial public offering (IPO) and floated on the ASX this morning, but it’s likely not feeling very welcome.

The Careteq Limited (ASX: CTQ) share price tumbled 25% less than its prospectus‘ offer price on listing.

At the time of writing, the company’s stock is trading at 15 cents apiece – down from its offer price of 20 cents a share.

Let’s take a closer look at what Careteq does and its ASX IPO.

Careteq share price tumbles on float

Careteq debuted on the ASX at 11am AEDT Monday morning.

The company operates in the assisted living technology space, offering software-as-a-service solutions to assist the elderly and those with disabilities.

According to Careteq, its sector is “ripe for a technological disruption” as an ageing population combines with staff shortages and the Aged Care Royal Commission’s recommendations.

Its serviceable addressable global market is expected to be worth US$32 billion a year by 2026, with Australia and New Zealand alone estimated to be worth around $1 billion a year.

Right now, the company offers its products through its Sofihub platform.

Additionally, it’s partnering with the United States-based SiTa Foundation. Together, they plan to develop a safety device to be used to combat domestic violence.

Careteq CEO Peter Scala commented on the company’s future, saying:

As the cost of providing aged and disability care rises, it is our belief that this will prompt government and non-government funders to increasingly turn to assistive living technology solutions, such as ours, to control costs and provide better patient outcomes.

Careteq’s ASX IPO

Careteq’s IPO saw it offering 30 million shares in the company for 20 cents apiece.

By doing so, it raised $6 million, giving it an indicative market capitalisation of $24.7 million at its offer price.

The raised funds will help grow the company and allow it to access cross-selling opportunities.

It will also be put towards the development of new products, features, and applications. Finally, some of the funds will go to the company’s international expansion strategy.

At the time of writing, around 1.8 million Careteq shares – approximately $280,000 worth – have swapped hands on Monday.

Should you invest $1,000 in Careteq right now?

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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