Although Raspberry Pi has seen impressive interest in its IPO so far, with its share price soaring just after the launch, the dangers of a post-IPO plunge, like Deliveroo, remain a risk.
British microcomputer maker Raspberry Pi launched its initial public offering (IPO) today on the London Stock Exchange (LSE) after pricing its shares at 280p.
For now, only conditional trading is allowed, which means that only some select investors will be able to trade the company’s shares, with the majority of retail investors having to wait until Friday 14 June, when trading opens for everyone.
Following the IPO however, Raspberry Pi’s shares soared as high as 392p, with the company revealing that it was hoping for a valuation of about £541.6 million (€642.48 million).
The Cambridge based group said on its website: “This is a watershed moment for Raspberry Pi, and the start of a new phase in our evolution: access to the public market will enable us to build more of the products you love, faster. And the money raised by the Raspberry Pi Foundation in the IPO will support its ambitions for global impact in its second decade.”
Regarding the company’s decision to list on the London Stock Exchange, Eben Upton, the chief executive officer (CEO) of Raspberry Pi said, as reported by This is Money, “The quality of the interactions during the marketing process has underlined our belief that London has the right calibre and sophistication of investor to support growing, ambitious technology businesses such as Raspberry Pi.
“The reaction that we have received is a reflection of the world-class team that we have assembled and the strength of the loyal community with whom we have grown.”
Raspberry Pi’s IPO has been a boost for the UK stock market, which has seen a number of companies such as Flutter Entertainment, Tui, Shell and CRH announce that they were considering moving to US stock markets recently.
How can Raspberry Pi avoid a post-IPO share price fall?
Although Raspberry Pi has taken a major step by listing publicly, the hurdles are far from over, with several companies like Deliveroo seeing a major plunge in share price following their IPOs.
Alex Stella, chief operating officer (COO) at Investor Hub said: “The Raspberry Pi IPO is a critical moment for UK capital markets. This is an opportunity to bring excitement back to the market. We cannot afford to have the IPO-window slammed shut by another Deliveroo style situation, which many called ‘the worst IPO in history’.
Reinforcing how crucial investor feedback can be, Stella noted that feedback from all classes of investors was absolutely vital, as it helped determine whether the company has priced its shares right in the IPO.
Stella added: “I would encourage the team at Raspberry Pi to target a broad spectrum of investors. Once they commence trading, everyone will be able to buy and sell shares.
“As was the case with Deliveroo, even the most ‘loyal’ institutional investors can quickly become sellers. The marginal buyer or seller is more likely to be someone they have not spoken with before.
Finally, Stella cautioned against neglecting retail investors, saying, “After-market support will come from retail investors. Most IPO books are heavily oversubscribed, it’s part of the marketing. This doesn’t necessarily mean that there is an enormous amount of latent demand that will translate to on-market buying.
“For companies like Raspberry Pi, there will be a large contingent of retail investors who have not been able to access the IPO prospectus that should be engaged from the outset of the listing.”
