The Airtasker Ltd (ASX: ART) share price finished March 77% higher than its listing price of 65 cents per share. But there's more to this than meets the eye.
Let's take a closer look at what is going on with the Airtasker share price.
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Short-lived hype for the Airtasker share price?
Airtasker made its ASX debut last Thursday where its shares opened 55% higher at $1.01.
Its shares would surge as high as $1.965 the next day, before a $1.750 close. It took just two days for its shares to rally almost 170% higher than its listing price.
However, it took just two days for the Airtasker share price to lose momentum and come crashing back to earth.
From its Friday close of $1.750, its shares would slump 36% to finish March at $1.170, or just 15% higher than its opening price.
While a 77% increase from its listing price is impressive, the main winners are those that managed to participate in the heavily oversubscribed initial public offering (IPO) or those that managed to get in early.
This isn't the first time
This isn't the first time an IPO has gone from boom to bust. As a matter of fact, there's a long list of recent IPOs that slumped days or weeks after listing. And, similar to Airtasker, the main winners were those that managed to participate in the IPO or got in early.
Respiratory protection equipment manufacturer, CleanSpace Ltd (ASX: CSX) had a listing price of $4.41 per share. On 23 October, its shares would close 80% higher on its first day at $7.415. After a number of attempts at breaking above its debut high, a weak half-year results announcement in February and a poor sales update this week has crashed the CleanSpace share price to just $1.920.
Perhaps a better example is Douugh Ltd (ASX: DOU), a financial wellness platform with various budgeting, banking, and investment features. Its shares had a listing price of 3 cents and surged as much as 1,500% to 49 cents in just two weeks. In the following months, its shares would halve. Currently, they are trading around the 20 cent mark.
Other notable examples include 4DMedical Ltd (ASX: 4DX), Credit Clear Ltd (ASX: CCR), DC Two Ltd (ASX: DC2) and Doctor Care Anywhere Group PLC (ASX: DOC).
Should investors be worried?
Airtasker is one of Australia's leading marketplaces for local services. In 2020, Airtasker established marketplaces in New Zealand, Singapore, and Ireland. As well as existing operations in the United Kingdom and a planned launch in the United States in 2021.
While approximately 99% of its revenues are derived from Australia, the company intends to implement growth marketing initiatives to scale internationally.
The company clearly has a runway for growth, but at the same time, its shares are already very richly valued.
In FY20, Airtasker generated a pro forma revenue of $19.3 million and a net loss of $5.2 million. At its current market capitalisation of approximately $500 million, its shares are trading at approximately 26 times FY20 revenue.
