Alphawave IP’s shares are already down by 20% on the first day of conditional dealings and the cynics will be queueing up to say it is no shock that a company with the stock ticker of AWE is coming a cropper, given its lofty price tag.
This is a great shame, though, and no cause for celebration. Alphawave IP has a business model which investors understand and know can work well, thanks to the ARM Holdings’ time as a FTSE 100 firm, so London still seems like a good choice for the listing.
But another poor start for a high profile flotation, and one that comes so soon after Deliveroo, will inevitably be used as a stick with which to beat the London Stock Exchange and the London market more widely, amid accusations that the UK investment community doesn’t ‘get’ technology or like entrepreneurs – when nothing could be further from the truth.
“The finger-pointing will now doubtless begin, as the company, advisers, investors and onlookers try to work out why Alphawave IP’s shares are sinking quite so fast, even though the global semiconductor industry seems to be booming right now and the company has a business model which looks perfect to capitalise upon demand for silicon chips over the long term as well,” says AJ Bell Investment Director, Russ Mould.
“As it turns out, through sheer bad luck, Alphawave IP is coming to market in a volatile week. Global markets are suffering their first stumble for some time, owing to unrest in the Middle East, fears of inflation and ongoing concerns over what could be an uneven global recovery in light of India’s ongoing woes and outbreaks of COVID-19 in Taiwan.
“Markets also seem to be turning slightly against long-term growth stories which offer ‘jam tomorrow’ in favour of cyclical recovery plays which have scope to offer rapid earnings increases now and therefore ‘jam today’. Tech stocks have started to slide and momentum favourites like Tesla, the ARK family of investment funds, SPACs and IPOs have all started to perform less well. Even the Philadelphia Semiconductor index, or SOX, has lost 14% OF its value since it peaked on 5 April, despite plentiful evidence that silicon chips are still in short supply.