Can New IPOs Even Make It in This Market?
Instructure Inc (NYSE:INST) is like any other initial public offering (IPO) to hit the market. It’s expensively priced, the company is still at an early stage of development, and investment risk for shareholders should be considered at a maximum. But despite these disadvantages, investors should keep a close eye on INST stock.
However, in any market, there are businesses that are growing—providing goods or services that are in demand, helping customers operate more efficiently and more effectively.
It’s been a tough start to the year and investor sentiment is shaky. What the equity market really needs is the most important news going: financial results. Earnings season can’t come soon enough. This market is just plain cranky.
Instructure is a micro-cap technology company out of Salt Lake City, Utah. The company recently sold just over five million common shares at $16.00 apiece, with the full exercise of 660,000 additional shares to cover overallotments. Big name investment banks were behind the deal. Instructure stock is beating the market already.
The company’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
What Instructure does is it sells software that enables organization-wide training and online learning. Say, for example, you were a university or a major retailer with students or employees countrywide. It’s expensive and time-consuming to get everyone together for a training session, so why not do it online? It’s quick, much more efficient, and a lot less costly than travelling.
Instructure has a burgeoning customer base (more than 1,600 as of September 2015) in more than 25 countries. These include universities and colleges, K–12 school districts, and corporate customers.
In 2012, the company’s total sales were $8.8 million. They were $26.1 million in 2013 and $44.4 million in 2014. For the first nine months of 2015, the company’s revenues came to $51.4 million. This business is still very much early-stage; net losses are expected for a while, as the company continues to invest in its expansion.
Naturally, being an emerging company, it is a 100% risk-capital equity security. As a business, Instructure will very likely need to sell more shares to the marketplace to finance its operations going forward and there is seasonality to its sales.
So far, Instructure stock is off to a good start. The company’s subscription order backlog is growing and Utah Business Magazine just named it one of Utah’s best companies to work for in 2015, three years running.
As mentioned, this IPO is at an early stage of development and losses are expected for upcoming periods.
But genuine new business growth is a tough thing to come by these days and institutional investors will bid consistent outperformers.
Instructure stock has a lot of potential going forward. A good read of the company’s offering prospectus yields a tremendous amount of useful information, making INST stock at least worth a second glance.