Ever since the Trainline's upcoming IPO became public knowledge late last month, most of the commentary surrounding the company has focussed on the failure of the other tech IPOs in 2014. Take a look at our beginners video for spread betting
Certainly, the launches of AO World or Just Eat aren't going to fill investors with confidence and the performances of Weibo in the US or King more locally don't make for entirely pleasant reading. But are traders being too quick to dismiss the rail ticket seller?
Perhaps fittingly for the UK rail industry, the Trainline's IPO has seen major delays. Originally scheduled two years ago, the company's private backers, Exponent Private Equity, decided to wait for increased demand before cashing in on the company. That there was such a lack of investor enthusiasm back then is ominous, but, will it result in the Trainline going for a bargain price?
Exponent Private Equity's loss could well end up as investor's gain if Morgan Stanley, who are advising the float, end up under-pricing the IPO to attract more attention. And for those who end up with a stake in the UK's largest rail booker, there are plenty of signs that shares may be set for a healthy performance.
Firstly, tech IPOs in 2014 haven't been the all-round disaster that many commentators are claiming. Just Eat may have been overinvested in at its launch - leading to a correction straight back to normal levels in its first fortnight - but since reaching a nadir below 200p in mid-May has recovered, opening on July 7 at 260p. It's been a similar story for King, rising 27% in the same period after a rocky opening on the markets.
The Trainline is also not solely a tech-based company, but instead straddles both the tech and transport spheres. The much-famed volatility of the tech industry is not replicated in transport, where UK companies like Stagecoach and Go-Ahead (both of whom provide rail services) have seen steady growth over the past few years.
Its position in both online and a more venerable industry brings comparison to another well-known UK website to float recently: Zoopla. And the picture at Zoopla is largely positive, with a strong IPO that valued the company at £960.5 million (or 230p per share): towards the top of its £835 million-£1.04 billion range.
The stock opened on July 7 at 264p, having seen a respectable 15% rise since first listing on June 18. If the Trainline can show a similar growth in its first weeks on the market, then those doubting the decision to float in 2014 may have to perform a volte-face.
Of course, plenty of questions remain about the company before a solid decision to invest can be made: the lack of information about users and profits from the past year or so is troubling, for one. But to dismiss the Trainline out of hand based on the supposed failure of other companies is probably a little premature.
More information on the Trainline IPO: http://www.ig.com/uk/trainline-ipo-grey-market
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