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Let’s ignore the war and look ahead to April when hopefully some of this uncertainty has psychologically normalised in the minds of traders and investors alike and there’s something resembling (relative) normality.
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We’ve got at least one such “normal” event to look forward to: a big-name IPO hitting the boards of the ASX. No, it’s not Canva – Canva have perhaps missed their chance to IPO, assuming they ever truly wanted to at all – but it’s an Aussie icon.
That icon is Koala – yes, the mattress company. Don’t worry, they aren’t publicly listing just to sell beds. They also want to expand into furniture, presumably giving Nick Scali a run for its money to name at least one potential competitor.
According to reports elsewhere, Koala is seeking to raise $70M for a $300M valuation, which is 10x its latest known earnings; Koala will also hit the ASX as a company intending to undertake a rapid expansion – both into furniture, and overseas markets – the US and Japan.
This it wants to do as shipping insurance costs push up the price of shipping anything anywhere; and as we are set to see COVID-era-throwback supply chain disruptions for just about everything. It also wants to do this under Trump’s tariff regime.
It also means the company wants to start selling beds and furniture at home and overseas, presumably expensive, at a time when inflation is rising; interest rates are set to hike, and both Australian and global consumer sentiment remains low.
On a vibes-based analysis, market fear (at least in March) is palpable the world-over, though in Koala’s defence, this will probably change once the current situation normalises.
Still, it’s a pretty big bet.
This smells familiar…
And that pattern of hitting the ASX with global expansion in mind reminds me of another stock: Guzman Y Gomez.
GYG for all intents and purposes seemed to make a lot of institutional investors money, those who got in on the ground floor in the behind-the-scenes world of pre-retail-IPO participation; now, its one of the most shorted stocks on the ASX.
GYG is down nearly -50% over the last twelve months; as of Friday 13 March it sits at a record low of $17.40/sh after listing in June 2024 around $30 bucks.
For a year, it had a good run. Shares hit over $40/ea in December of 2024. It has been a downward slide since as the company’s staged earnings reports have consistently failed to deliver the growth promised at launch.
So the question then becomes – will Koala learn from GYG’s mistakes? That remains to be seen.
For anybody retail looking to participate in the Koala IPO next month, however, I would suggest maybe a good idea would be to get in and get out, then re-enter once we have a better idea of fundamentals.
Not financial advice of course, just the idle but informed vapourings of this cynical finance journalist.
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