Agora starts life as a public company by more than doubling to $50 a share – TipsClear
Shares of Agora, a China and US-based “real-time engagement” API company, rose today after going public.
Yesterday Agora priced 17.5 million shares at a price of $ 20, with a target range of $ 16 to $ 18 per share. The firm raised $ 350 in its first quarter, or nearly 10 times its Q1 2020 revenue, and has now capitalized rapidly and has seen its modest cash consumption as a constant concern on the runway forever has made it.
But when it was first successful, Agora’s stock price increased rapidly, as it was not universally popular. Bill Gurley, a regular critic of the traditional IPO process – an enterprise capitalist, therefore someone with a stake in this particular gamble – is involved in:
Let me translate Gurley irked – rightly, at least to some degree – as the Agora opened at $ 45 per share, the company’s IPO at a terrible price. By this we mean that the company needed Have sold their IPO shares not at $ 20, but at $ 45, the price at which the market quickly retracted them.
As $ 45 twice exceeded $ 20, missed by its bankers ” [their] Original estimate. “Given the number of shares sold by the company, inaccurate pricing can be up to $ 437.5 million!”
This argument has merit, but is not as complete a slam dunk as it may appear. Chat with the CEOs of public companies and they will tell you how important it is to have stable, stable, long-term shareholders of their equity. Those you can say meet at a roadshow and invest in their IPO shares.
Those groups – long-term investors who claim to love tech people dearly – are likely slightly more price conscious than traders eager to find the upside in recent debuts. That is, people are more likely to hold shares for a shorter period of time.
Therefore, if you want a long-term shareholder, you may have to pay the price of the IPO under the market price as soon as you start trading.
Still holy Feces $ 20 per share is not close to $ 45. Gurali has a point.
Change may come. Agora News rolls back the American Exchange NYSE, which is doing. Listing companies directly (starting business only, pricing or raising new capital), and trying to come up with a way to raise capital. This relieves the issues that Gurley highlighted above. At least in theory.
Obviously, if that model becomes possible and long-term investors are willing to pay for the shares in a slightly different way, the new approach will be better than the old one. For companies that are great. What kind of companies burn the most from first day pop? I think it is the most attractive or hypnotized companies.
The companies that will make the most lucrative IPOs will use the new method, which – what? Detroit to go out of fashion? Signaling issues abound!
Anyway, it was the first day for Agora.