Redbubble chief flies flag after 9 per cent IPO rise
Redbubble chief executive Martin Hosking said it was demonstrating it is possible to lead a global consumer technology player from Australia after a good performance on its first day as a public company.
The e-commerce business started trading on the ASX on Monday and closed 9 per cent up on its $1.33 issue price at $1.45, after hitting a high of $1.53 shortly after trade opened.
“The attention we’re getting reflects the fact that we are a global consumer story that is interesting for people. I love Companies like Aconex and Atlassian, but they are hard to explain, this has the consumer side,” Mr Hosking said.
“I like the leadership position we’ve established. It’s good for us to show that you can build a global tech company from Australia. But our determination to build a true, global consumer tech company remains.”
The e-commerce business, which provides independent artists with a way to monetise their designs by printing them on clothing and homewares, intends to be bigger than its US rival Etsy, which has taken a tumble on the NASDAQ in the past year, falling from a high of almost $US22 ($30.20) to around $8.60 currently.
Despite the fall, it still has a market capitalisation of more than $US970 million.
Through its initial public offering Redbubble raised $30 million through the issue of new shares and an additional $9.8 million from the sale of shares owned by existing investors, giving it a market value of more than $268 million. With its share price jump on Monday, it’s valued at $287.6 million.
Its success comes on the back of the high profile WiseTech Global float in April, which also traded well on its first day, rising 16.2 per cent, and is now trading up around 35 per cent at $4.52.
Earlier this month fintech company Afterpay also listed, climbing 25 per cent on day one.
While Mr Hosking was pleased with the stock’s performance on Monday, he said he would not be pre-occupied with the share price.
“It’s not a very accurate measure of what you’re doing as a company. What you’re doing does not change from day-to-day or week-to-week, but the share price does,” he said.
A GOOD START
Morgans senior research analyst Ivor Ries said it was a “pretty good” opening day for the company, and tipped that it could have substantially further upside.
“There are a lot of marketplace companies around the world, and for the purposes of the IPO, Redbubble was priced at a fairly big discount to the multiples others were priced on,” he said.
“These other companies are trading around 3.7 times revenue for the 2017 financial year and Redbubble is trading at 1.6 times. If they meet their prospectus targets … there should be some potential for them to trade higher.”
It is the third time Mr Hosking has been involved in leading a listed technology company, having previously been chairman of tech darling Aconex, before stepping down in 2011.
He was also instrumental in the float of search engine company LookSmart in 1999, which was one of the early successes of the dotcom boom, before its share price was hit badly in the aftermath.
Mr Hosking said he did not want to repeat LookSmart’s story, and was looking to create long-term value in the company, not short gains.
“LookSmart was a product of the dotcom era. It had far too much excitement and I don’t want to replicate that this time,” he said.
“The biggest lesson from Aconex was just the real importance of investing in the fundamentals … [Rob Phillpot and Leigh Jasper] had a sense of what the company would look like into the future.”
Redbubble has sold off 19 per cent of the business to new and existing shareholders, but Mr Hosking and the board members – which include chairman Richard Cawsey and Piton Capital partner Greg Lockwood – opted not to sell down their stakes.
Through his family trust, Mr Hosking remains the largest shareholder in the company with a 24.15 per cent stake and Richard Cawsey maintains a 4.52 per cent shareholding.
Other major shareholders include Blackbird Ventures with 4.21 per cent, Redbubble investor Simon Yencken with 2.97 per cent and Piton Capital with 2.79 per cent, along with a range of institutional investors.
Last year, Redbubble recorded $71 million in revenue and is projecting this to grow to $114.5 million this financial year, and to further climb to $172.1 million in fiscal 2017.
In the next six months the company intends to launch another 20 products and over the longer term intends to increase its product suite more substantially through the use of 3D printing.
“We’re optimistic about 3D printing as it becomes more commercially viable. The issue has been it would take a long time to do a print,” Mr Hosking said. “But we’re confident it will open up new areas around jewellery in the short-term.”
The company is facing two legal challenges from motorcycle gang Hells Angels and Japan’s The Pokemon Company for alleged copyright infringements. Mr Hosking said the business was defending these claims.
“We’re confident in our legal position. We’re the marketplace, not the creators of the content,” he said.
“We already have a team of about 10 people now working exclusively on copyright. We’re always aware of the importance of these issues and addressing the concerns of licence holders.”