Investors piled in to Trustpilot (TRST) after shares in the online reviews platform began trading on the London market.
Retail investors had been excluded from the IPO (initial public offering) so there was a ready army of willing buyers poised to pounce. And pounce they did, sending the stock soaring 11% to 294.5p.
The Denmark-based digital reviews and analytics platform had earlier priced the IPO at 265p a share, valuing the business at £1.08 billion. The market stands at £1.2 billion following the strong start to trading.
ONLINE GROWTH PREMIUM
Like many digital commerce businesses, Trustpilot’s business has grown during the pandemic. It currently manages reviews for more than half a million web domains, has 19,500 paying customers and adds more than 12,000 new domains every month, according to chief executive and founder Peter Holten Muehlmann.
Trustpilot has grown revenues from $64.3 million to $102 million (to 31 December 2020) in the past two years, while adjusted earnings before interest, taxes, depreciation and amortisation swung from a $21.5 million loss to a $6.1 million profit.
PREMIUM VALUATION TO SECTOR
‘Trustpilot’s valuation at admission (of double-digit trailing sales) is at a premium to the average for the Megabuyte Software & Digital Platforms sector of 8.5 trailing enterprise value to sales but still trails other digital platforms such as Rightmove (RMV), which commands a 23.5-times trailing revenue multiple but is also very profitable with EV/EBITDA standing at 36-times,’ said Megabuyte analyst Cameron Naylor.
‘Trustpilot's listing adds to a growing IPO outlook for the UK Software & Digital Platforms sector, given the potential upcoming billion pound IPOs of Paysafe, TransferWise, Darktrace and Deliveroo,’ Naylor said.
