Alphawave stock went public Thursday in London. The company made headlines as a rare case of a North American company crossing the Atlantic for an IPO. It went public in the midst of a notable dip in tech stocks as well.
You might think Alphawave is off-limits because it doesn’t trade on a U.S. exchange. That’s not exactly true. And because it could be one of the most important tech stocks of our time, you’ll want to check this out…
Shares of the Canadian chip company went public May 13, 2021, at a valuation of around $4.3 billion. They are down 20% since. That’s thanks to a slump in the London tech market making it harder for the exchange to meet its goal of attracting tech unicorns.
But ultimately, Alphawave wanted to get in on the U.K.’s budding technology and semiconductor industry ecosystem, ahead of the rollout of 5G networks.
However, 5G is not the only major tech trend Alphawave wants to serve.
Here’s why Alphawave went public at just the right time for investors to profit…
What Is Alphawave?
Alphawave IP is a Toronto- based company that provides high-speed Internet connectivity solutions.
This company has five different Internet Protocol solutions for different purposes, serving markets like data centers, artificial intelligence, 5G infrastructure, and even autonomous vehicles.
It also licenses its high-speed data transmission technology to chipmakers and receives royalties on every chip made through the process.
This is still a very young firm, but it’s growing fast. It’s been profitable since its start in 2017, and it has the attention of big investment firms like Blackrock Inc. (NYSE: BLK) and Janus Henderson Group Plc. (NYSE: JHG). The companies invested $390 million and $120 million, respectively, as Alphawave’s cornerstone investors leading to the IPO.
With all of the future technology trends potentially served by Alphawave – 5G, AI, self-driving cars, and more – a bright future likely awaits them.
A 20% loss after its IPO shouldn’t undermine that at all…
What Happened to the Alphawave IPO?
What happened to Alphawave stock following the IPO was not all that uncommon for IPO stocks. Shares before the IPO were “oversubscribed,” which meant demand for shares exceeded the supply.
This can be a great sign for the company, suggesting it is at least desirable. The problem, however, comes when the IPO price is far higher than the fundamentals suggest. Stocks can be mostly backed by hype for months and then see a big crash back to fair value when that hype dies.
The company’s chair, John Lofton Holt, was not very concerned when the decline started, saying he won’t judge the company’s performance on “a couple hours of conditional trading.” Holt said 80% of shares went to fund managers on a long-term basis. The company simply chose a volatile time to have its IPO, which certainly plays a role.
Tech stocks happened to be down around Alphawave’s IPO. The Nasdaq fell more than 5% in the second week of May. We also started to see higher inflation affect the market, which tends to lower the demand for tech products.
Other IPOs in Europe had trouble around the same time. A German car company called Meinauto backed out of its IPO, citing “adverse market conditions.”
Alphawave’s IPO was important for setting the tone for tech IPOs on the London exchange, which wants to be a hub for tech IPOs.
That remains to be seen. But Alphawave on its own shows promise…
Should You Buy Alphawave Stock?
It has been profitable since it started operating in 2017. This is still a very young company, but early profits are a good sign.
Of course, that could also go either way, as the bottom line can start to thin when companies begin to expand. That’s why, when we consider Alphawave’s future prospects, we eye the future demand it’s meeting instead.
Alphawave is set to provide for the biggest tech trends of the century, and they’re all expected to take shape over the next decade.
These are all massive growth industries.
The 5G industry could be worth $667 billion by 2026, a 13,240% surge from just $5 billion in 2020.
The self-driving car market is also expected to hit $220 billion by 2025, a 292% pop from $56 billion in 2020.
Finally, AI could add $13 trillion to the global GDP by 2030.
5G, AI, and self-driving vehicles need high-speed connection technology like Alphawave provides in order to operate effectively. Alphawave will aim to supply all of these trends.
While little is known about the company yet, it’s has great potential to win in these markets.
Today, Alphawave trades at a hefty $292. Most investors will want to wait for a clearer opportunity to invest via American stock exchanges. But if you would rather not wait, here is how you can get your hands on shares and potentially grab some of the biggest tech gains of the century.
How You Can Buy Alphawave Stock
For now, shares of Alphawave only trade on the London Exchange. And buying foreign stocks involves a few extra steps if you have a U.S. trading account.
The easiest way to invest in foreign stocks is to have a broker that allows over-the-counter (OTC) trading. Charles Schwab and Fidelity are two examples.
Alternatively, you can open an account overseas. That’s called “foreign direct investing.” It can be tough, because you might run into exchange rate problems and tax law differences. Usually, there is a language barrier – but that should not be a huge problem for most Americans trading the London Exchange.
The easiest way to buy foreign stock is to wait for the company’s American depository receipts (ADR) to hit the domestic exchange. For example, Alibaba Group Holding Ltd. (NYSE: BABA) trades ADRs on the New York Stock Exchange.
Alphawave might similarly trade on the NYSE in time, depending on how its profile expands in the London area.
At the very least, you may find a mutual fund or exchange traded fund invested in Alphawave – there are plenty of tech and semiconductor funds invested in global stocks.
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Source: Money Morning