Made.com’s plush entry onto the London market unravels with shares falling 8%
Q1 2021 hedge fund letters, conferences and more
"Made.com planned a plush entry onto the London market, with a valuation of £775.3 million, but initial trading saw an unravelling of demand with shares down by 8% from its IPO price of 200p.
Made.com aims to capitalise on the accelerated shift to e-commerce and the high demand for home makeovers witnessed over the pandemic. But timing is everything for an IPO, and its arrival as a new piece of stock market furniture comes after two disappointing debuts in the form of Deliveroo and Alphawave IP.
With high street retailers firmly back in business there is also now greater competition in the furniture space. Other data from the ONS suggests that spending on so called ‘delayable’ goods like furniture has waned a little since the big spending spurt in April. There is also plenty of rivals in the online home space, with Dunelm and DFS likely to continue to be tough competition. US listed Wayfair is also a big player in the home décor space, and is also adept at using augmented reality to show customers what products will look like in their homes.
However, newly formed habits of browsing the web for ways to improve our living space are unlikely to unwind and are forecast to be here to stay. Made.com already seems to have a good record in attracting repeat orders from its core base of millennial customers, and money raised from the flotation will be focused on accelerating growth, particularly in the European market. As the dust settles on the furniture, this volatile start to trading may smooth out over the weeks to come.
The Nervousness Surrounding Brexit
There has been a veritable flood of IPOs onto the London market in recent months compared to the drought of the previous few years brought about by the panic of the pandemic on top of the nervousness surrounding Brexit.
E-commerce sites in particular are seizing the moment, with The Hut Group the first out of the traps in London with a hugely successful IPO in August 2020.
Moonpig’s positioning as an e-commerce platform rather than an online card retailer helped its shares fly as it launched onto the market at the beginning of February. However, its shares have been on quite a bumpy ride, losing momentum in recent days.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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