Updated: June 26, 2019
Fastned, a Dutch-based scale-up company that develops and runs a network of 101 fast-charge stations for Full Electrical Vehicles (FEVs) in The Netherlands, UK and Germany, moved its listing again. This time from tiny nxchange to mainstream Euronext Amsterdam. The market opened last Friday at 11 euro, and closed at 52.99 euro. A run of almost +430%! The days afterwards the bubble deflated quickly. I am particularly interested in the moves of Fastned as it initially IPO’ed at NPEX, the exchange where Icecat is listed since February 2017.
Fastned, with its track record of burning money of mainly private investors – it has collected 40 million euro thusfar – failed to convince institutional investors to participate in a planned public offering as part of its listing process. Likely, the main reason was doubts over its ability to become cashflow positive within the foreseeable future. Despite a formidable revenues growth by 195% year-on-year in 2018, the annual revenues were only 1.6 million euro. The losses in 2018 were 6.3 million euro, and increased in absolute terms faster than the revenues. A bigger challenge than profitability – with current growth rates, the company is projected to be break-even in 2020 – is the cash need for investments in the expansion and upgrade of the network of fast-charge stations. That’s the real cashburner. Profit is an opinion – in what term are the investments depreciated – cash is a fact.
The Fastned board took the decision to list its shares nevertheless at Euronext, which was heartily welcomed by the more idealistically motivated small investor. The orderbook shows during the weekend – outside trading hours – a demand for 1,437 shares whilst only 9 shares are on offer! With a trading volume of almost 4 million euro during the first trading day, this shows that there is a clear potential for placing new shares, and it is hardly understandable why the Fastned board had decided against the public offering, and thus ignoring the cold responses of institutionals. Now, it’s a gamble if the market will not cool off before the company burns through its cash. The board will point at the share price as proof that the company was undervalued before. Institutional investors might question the rationale of idealistically motivated small investors.
Also Spotify followed the route of the direct listing without public offering, avoiding the expensive bank fees associated with share placement and underwriting. It was seen as a great success. Barry McCarthy, CFO of Spotify, sees it as an innovation of the IPO process in which listing and placing new shares are decoupled. Such a scenario might be an interesting option for Icecat as well.
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