It's always exciting when a big-name company conducts an initial public offering (IPO) on the ASX. This week, the latest company set to go through an IPO is furniture company, and now stock, The Koala Company Ltd (ASX: KOA).
IPOs are blockbuster events, as they mark the transition, listing, and debut of what is usually a private company into the public markets. An IPO is the first chance most ordinary retail investors have to buy shares in a company they might already know and love. As such, they can provoke intense speculation and excitement in the markets. We saw this in action back in mid-2024 with the IPO of Guzman y Gomez Ltd (ASX: GYG), whose shares ended up soaring when they began trading on the ASX.
Today, Koala stock has followed GYG to list on our stock market. This company will already be familiar to many Australians, thanks to the popularity of its online-based mattress, sofa, and furniture store.
By all accounts, Koala is a very successful business. In a pre-IPO ASX release, the company told investors that its revenues were up 24% over the first half of FY2026 to $165.1 million. That helped Koala book an operating profit of $10.7 million from the period, up from $3.64 million over the same period in 2025.
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Koala stock IPOs on the ASX
After a prospectus launch, stock offering, and settlement that all occurred earlier this month, The Koala Company's stock has debuted on the ASX today under the ticker code 'KOA'. The shares are floating after being offered at $3.40 each, giving Koala a nominal market capitalisation of $305.3 million and an enterprise value of $259.9 million. The new shares that will be issued under this IPO are forecast to raise $20 million for Koala.
At the time of writing, the IPO has gone well, with Koala stock currently up 2.65% at $3.49 a share.
Koala looks like a potentially exciting investment and is a home-grown success story. However, I will not be buying Koala stock during this IPO. I won't be buying them today, this week, or probably anytime soon.
Why? I have nothing against Koala itself. But I do not participate in IPOs as a rule.
The problem with IPOs
There are a few reasons why. Firstly, IPOs tend to generate huge hype and buzz, things that tend to push shares up higher than they should go. After a few days or weeks, that buzz fades as the new company begins to blend into the broader market. Investors, of course, are left holding the bag.
We saw this happen with Guzman y Gomez in 2024. GYG shares had a phenomenal IPO, gaining almost 50% in the first few months of trading on the ASX. But, as of today, GYG is down by more than 46% from where it began its ASX life.
That brings us to the second reason. IPOs are designed, front to back, to maximise the value for the sellers of shares into an IPO. Not for the buyers they are selling to. There are many ways the orchestrators of the IPO can do this, by deciding how many shares will float at the IPO to when insiders can sell their shares and what price the shares debut at.
It's for this reason that I think most buyers will be better off to wait.
I invested in an IPO once and lost a lot of money as a result. So perhaps I am biased here. But no matter how exciting a company is, I will always wait for the dust to settle from an IPO before I buy shares. That includes Koala stock.
