Shares in online furniture and homewares retailer Temple & Webster were whacked yesterday after the company floated on the ASX, further adding to the irrationality of local investors at the moment.
Even though the company’s $61 million IPO was heavily oversubscribed, it listed on nervy day’s trading with investors anxious about commodity prices.
But the shares came on after the November jobs report at 11.30 am which saw a surprising surge in new jobs (over 71,000 seasonally adjusted, after more than 56,000 in October), with the jobless rate dipping to 5.8%, a 20 month low.
That saw the headless chickens among investors and analysts and brokers immediately rule out any further rate cut (when smarter analysts, such as economists at the NAB have already ruled out any more rate cuts).
That was construed as being bad for banks in particular and down went their shares and Temple and Webster shares, without any sort of track record, were caught up in the selling wave, and down they went, falling to 75 cents, after they came on at 95 cents (They were issued at $1.10 a share).
Investors were also oddly concerned about the outlook for small-cap retailers in the wake of Dick Smith’s much-publicised woes – even though retail sales generally have been stronger than they have been in recent months. That concern flies in the face of solid sales reports from mid tier retailers like OrotonGroup.
Temple & Webster is said to be Australia’s largest online-only retailer of furniture and homewares has forecast a 27% increase in sales to around $76 million this financial year, according to its prospectus. Complicating matters is that Temple and Webster has yet to produce a profit, even though it is growing quickly.
The share price plunge took the company’s market value from $116 million pre-listing to $79 million, but the shares recovered to 90 cents by the close, lifting the value back towards the $100 million mark.
