For many people, a mere mention of tech investment brings up ugly memories of the dot-com bubble of the late 90s.
One behavioural frailty that traders are often guilty of is overcompensating after a failure. So it’s unsurprising that the attitude towards all but the healthiest tech companies listed on stock exchanges across the world is still one of extreme caution.
Indeed, there is a lot of talk in financial columns about how so many recent IPOs are trading at discounts – or lower than their opening price. However, the share prices of several newly-listed companies are actually going in the right direction despite this lack of faith from market commentators.
So can tech enthusiasts return to the market and support the companies that they are passionate about? Here are three IPOs from 2014 that could be worth a look.
Zoopla has just celebrated its second week on the FTSE, so it may be a little too soon to start making long-term calls about its stock performance. It had a healthy initial IPO though, slightly below the £1bn mark that many were hoping for but, at £960.5m, in the upper half of its £835m-£1.04bn range (and pretty close to IG’s grey market estimation of £975m).
That priced its shares at around the 230p mark, and unlike many other IPOs this year, they have remained at that level ever since. They are yet to drop below the lower limit of 200p set by Zoopla before the listing. In fact, over the past few days Zoopla has been on a steady rise, opening on 2 July at 246p - the highest level yet and 7.4 percent higher than a week previous.
Everything about Zoopla’s performance so far has been steady, perhaps because it operates in the growing UK property sector. Zoopla also has less trouble turning its strong user base into revenue than other tech ventures, with an increase of 26 percent for the six months leading up to March.
A comparative veteran on the markets is Weibo, the Chinese social media platform that launched its IPO on 17 April.
Unlike Zoopla’s initial fortnight, Weibo had a rocky start to life in the public arena with a share price that ranged from $16 to $24. Indeed, on opening the share price initially leapt from an opening price of $17 – the bottom of its $17-$19 range – before quickly returning.
The company has not yet dropped beneath that initial worth, however, and since normal service resumed has been steadily climbing to an opening cost of over $21 on 2 July – 15.3 percent higher than a month before.
Like its US equivalent Facebook, Weibo may have suffered from investors’ over excitement. Not only because it works in the realm of social media, but because its position as a major online Asian IPO invites comparison to Alibaba– the most talked about IPOs in 2014 (and a 32 percent owner of Weibo).
Closer to home is Just Eat, a platform for takeaway owners which floated back on 3 April. Like with Weibo, Just Eat’s IPO saw an initial flurry of excitement as its share price jumped 9 percent in the first day of trading. And, like Weibo again, that trend quickly reversed as Just Eat stock dwindled to below 200p – far off the initial highs of 280p – in mid-May.
Once the hangover receded, though, Just Eat’s value has become more apparent and its stock price has steadily grown again to a current level of 253p. It’s been floating around the 230-250p level for a while now, so could well be worth keeping an eye on to see what happens next.
The common theme with all three of these tech IPOs has been that diving in for early gains has tended not to yield amazing results. Maintaining a level head and fully assessing the true value of a company before investing, however, would appear to show that investing in technological innovation can still be a viable option.
This article has been written by Patrick Foot, financial markets writer at IG – a leading financial spread betting company.
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