IPOs (Initial public offerings) provide an exciting opportunity for growth investors. Generally, companies list on a public exchange via an IPO in order to raise capital and fund their growth strategies. It suggests that recently listed companies should grow their revenue and earnings at a…
far higher pace compared to the broader markets, allowing investors to get in at the “ground floor.”
However, these stocks are volatile, given their significantly higher valuation and lower visibility in terms of financials. Here, we take a look at two software IPOs Alfi (ALF) and Squarespace (SQSP) that have gained momentum in recent trading sessions.
Alfi is a micro-cap software company
Valued at a market cap of less than $150 million, Alfi provides interactive AI (artificial intelligence) and machine learning software. In the first quarter of 2021, Alfi reported revenue of just $17,450 while its cost of sales stood at $104,500. Its total operating expenses were close to $3 million which meant Alfi posted a net loss of $3.176 million in the March quarter.
Alfi operates as a software-as-a-service (SaaS) company in the DOOH (digital out of home) smart advertising segment. It leverages AI and big data to measure and predict human responses. The company’s vision technology is powered by AI to determine the age, gender, ethnicity, and geolocation of a person in front of an Alfi-enabled device. This tech will then deliver the viewers with curated ads based on their demographic profile, resulting in higher click-through rates and engagement.
Alfi stock went public on the NASDAQ last month and closed trading at $3.70 per share on May 7, 2021. It touched an all-time high of $16.45 before falling over 25% on June 23 to currently trade at $12.01.
Shares of Alfi more than doubled on June 15 after it announced a partnership with All-Niter. According to the terms of this agreement, All-Niter will ship and install 10,000 Alfi tablets to Uber and Lyft drivers in the U.S. allowing drivers to earn extra income and Alfi to gain significant traction among advertisers.
Alfi is pre-revenue and will have to close multiple deals such as the ones mentioned above to keep gaining investor confidence.
Squarespace operates as an online platform
Squarespace is valued at a market cap of over $8.5 billion. The company operates as a platform for enterprises and independent creators to build an online presence, grow their brands, and manage their businesses in the digital world. It offers websites, domains, e-commerce, and related tools for managing a social media presence and scheduling capabilities.
Squarespace stock went public on May 21 and…
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