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My Food Bag investors have been victims of a weak market, analysts say, but the drop in its share price appears to have leveled off.
The food delivery company listed on the NZX on Friday and was hailed as the largest initial public offering on the NZX in seven years.
The company’s founders and investors sold shares to new investors at $ 1.85 each, raising $ 342 million.
But the listing came as the stock market continued its slide from all-time highs, and commentators say it took away My Food Bag’s much-hyped price.
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On Friday, the company’s shares closed down 5.9 percent. On Monday they fell another 2.3 percent to close at $ 1.70.
The market as a whole closed down 0.8 percent.
Frances Sweetman, a senior analyst at Milford Asse Management, who invested in the listing, said markets had been very weak since investors submitted their offers and the price of My Food Bag was set.
“Signing up in a market as weak as it was on Friday is not surprising. It is always more difficult with new ads. Investors were nervous about how the company will respond to the general market weakness because we don’t have a track record to trust. The new listings are expected to underperform the overall market. “
The New Zealand market is now down about 10 percent since January.
Jeremy Sullivan, investment advisor to Hamilton Hindin Greene, said My Food Bag was priced too high, but its stock price had fallen almost as much as the general market since it was priced. “You have to take into account the market in which it is listed.”
He said there were more sellers in the queue of the market than buyers, and sellers had larger stakes to sell. But there was some support for the stock on Tuesday morning, as the price rose 1.18 percent to $ 1.72.
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On Friday, the company’s shares closed down 5.9 percent. They fell another 2.3 percent on Monday to close at $ 1.70, but rebounded Tuesday morning.
Sweetman said there was strong demand during the IPO process. The offering was oversubscribed and not all investors were able to obtain the full share allocation they requested. It had a strong brand and an impressive management team, he said, although it had a “formidable” competitor at Hello Fresh.
She said her stock price performance from here on would depend on how the company performs. “Since the book was created, there has been no news from the company … just a change in market conditions.”
The My Food Bag listing was supported by three key institutional investors, Milford Funds Limited, Harbor Asset Management Limited and Investment Services Group Limited, who pledged to acquire stakes of more than 5 percent, and the shares were also offered to through three major brokerages and the wide range of current and past clients and employees of the company. Some brokers and investors criticized it for being overpriced and having a slower growth outlook.
Only $ 54.8 million of the money raised in the IPO went into the pocket of My Food Bag, with $ 16.7 million used to fund the costs of the offering, $ 38.2 million to pay off bank debt and $ 287, 3 million intended for existing shareholders who were selling their shares.
Hello Fresh’s share price has risen from € 18 (NZ $ 29.90) to € 73 and then back to € 54 in the past 12 months as the impact of Covid boosted demand for home delivery.
