2023-07-28 05:52:20 ET
While the IPO market has staged a comeback after a downturn that lasted more than a year, Surf Air Mobility's ( NYSE: SRFM ) weak trading debut showed that investors are picky about the companies they are willing to back.
Shares of Surf Air ( SRFM ) started trading on Thursday at $5 per share, before spiraling to as low as $2.75. The stock ended 37% lower at $3.15 per share, but has since cut back losses to trade 15.9% higher at $3.65 apiece before the bell on Friday.
The company's market capitalization stood at $582.5M, well below the $1.2B valuation reportedly given by GEM Asset Management in a fundraising round finalized last month.
Surf Air ( SRFM ), which provides regional air travel services, is the first company to go public through a direct listing in over a year. It initially planned for a SPAC merger, but scrapped the plan in 2022.
Surf Air ( SRFM ) is likely years away from turning profitable, as it flagged substantial doubt about its ability to continue as a going concern. Investing Group leader Donovan Jones had cautioned investors against buying into Surf Air ( SRFM ), given its slowing revenue growth, high operating losses and cash burn.
However, hopes remain of an IPO market rebound, even as traders are being cautious. For a broader view, the Renaissance IPO ETF ( IPO ) has gained ~47% YTD, compared with the benchmark S&P 500 index's ~19% increase .
More on the IPO market
- IPO Market Showing Signs Of Life, Drawing H2 Optimism
- U.S. IPO Weekly Recap: Oddity Jumps 50%
- Kodiak's Weak IPO Is Our Opportunity
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Direct listing of Surf Air Mobility gets cold reception