Alphawave shares lift slightly, after 22 per cent plunge in London stock market debut
Following a turbulent market debut yesterday, Alphawave’s shares rebounded slightly in its second day of trading in the capital.
The tech firm’s share price bounced to 366.2p per share this morning, down 1.03 per cent, after prices fell as low as 310.85p yesterday.
Over half a billion pounds was wiped from the Canadian computer chip designer’s value yesterday morning, as the company’s initial public offering (IPO) went awry.
Shares in sank 22 per cent, pushing its market cap down from the initial value of £3.1bn to around £2.23bn
The chip designer, which avoided a listing on New York’s tech-heavy Nasdaq index, set up a price of 410p per share for its float.
‘’With IPOs timing is everything and Alphawave launches onto the market on a tide of demand for semiconductors, with shortages of chips disrupting production of cars and electronic goods across the world,” senior investment and markets analyst at Hargreaves Lansdown, Susannah Streeter, said.
Streeter added that the Semiconductor Industry Association revealed that last year global sales increased by 6.8 per cent compared to 2019, despite the pandemic disruption.
“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,” AJ Bell investment director, Russ Mould, said.
Turbulent tech
Alphawave is the latest high profile tech company to see its shares collapse at the last minute, rivalling Deliveroo’s share slump of 30 per cent at the end of March – draining more than £2bn from the company’s value.
“Alphawave IP’s shares are already down by 20 per cent 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,” Mould added.
“This is a great shame, though, and no cause for celebration,” he continued, because “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.”
Toronto-based Alphawave, which was founded in 2017, licences high-speed data transmission technology to chipmakers, receiving a royalty on every chip made.
The chip designer plotted its headquarters in the UK as part of its listing, which paints a good image of the capital, Streeter suggested.
“Luring a tech firm from across the Atlantic in such a sought after industry segment is being seen as a coup for London, and will help iron out the creases rucked up by the messy Deliveroo floatation.”
“The UK had carved out a reputational niche as a hotbed for chip development but successfully nurtured Arm Holdings was cherry-picked for take-over by Japanese conglomerate Soft Bank,” Streeter added, suggesting the UK’s eyes are set on Arm’s value and are less welcoming to newcomers.
Instead of being viewed as a ‘coup for London’, Mould thought it might push investors away from the capital’s stock market.
“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.”