ChannelAdvisor Corp shares soared as much as 39 percent in their market debut on Thursday as investors bet the e-commerce software company will benefit from the rapid global spread of online buying and selling.
The company’s shares opened up 25 percent, after its initial public offering of 5.8 million shares was priced at $14 per share, the high end of its pricing range. They touched an intraday high of $19.49, valuing the company at about $400 million.
ChannelAdvisor, founded in 2001, helps companies sell via online marketplaces and websites such as Amazon.com Inc, Google Inc and eBay Inc. Customers include Ann Taylor, eBags.com, J&R Electronics and Jos. A. Bank Clothiers.
E-commerce is growing at about 15 percent a year and Forrester Research estimates that global online consumer spending will top $1 trillion by 2016.
ChannelAdvisor gets fees when its customers generate an agreed-upon volume of sales using its software. When sales exceed those levels, customers pay a little more in what the company calls a “shared-success model.”
“We have about 2,000 customers and handled over $3.5 billion in Gross Merchandise Volume last year,” said Scot Wingo, chief executive of ChannelAdvisor. “That’s really the tip of the iceberg. We have a lot of wood to chop, as these bankers like to say.”
The IPO raised more than $80 million and the Morrisville, North Carolina-based company, whose competitors include Mercent Corp, plans to use the proceeds to expand outside North America and build its and sales and marketing capabilities.
North America accounts for most online consumer spending currently, however Forrester expects the region to account for about a third of the global total in the future as other countries grow faster.
“We would love to be a truly global company and be a reflection of the truly global nature of e-commerce,” Wingo said.
ChannelAdvisor does not help companies sell through online marketplaces run by Alibaba, the Chinese e-commerce leader. However, Wingo said that the company plans to do so in the future.
“So far, we’ve done everything not to sell our software into China,” Wingo said. “But it’s interesting to us. Alibaba is bigger than eBay and Amazon combined.”
Investment firms Kodiak Venture Partners, Advance Technology Ventures and New Enterprise Associates own about two-thirds of ChannelAdvisor.
Last week, data analysis software maker Tableau Software Inc saw its shares jump as much as 68 percent in its trading debut on rising interest on big data.
Shares of business software companies such as WorkDay Inc, Guidewire Software Inc and Service Now Inc are also trading well above their IPO prices.
Enterprise companies, which sell services to businesses rather than individuals, have risen 37 percent, on average, in the two years since their IPOs, compared with 13 percent for consumer companies, according to market data firm Ipreo.
The companies are being buoyed by new technologies like mobile and “cloud” computing, trends that are creating tremendous business opportunities for young enterprise firms, investors say, leading them to grab market share from incumbents like Oracle Corp and SAP AG.
One of the biggest reasons for the enthusiasm involves the cloud, or the ability to access data on the Internet from remote servers rather than from their own computers in house — and the savings and flexibility that come with it.
Goldman Sachs and Stifel Nicolaus are the lead underwriters on the offering.
ChannelAdvisor shares were trading up 33 percent at $18.53 on the New York Stock Exchange on Thursday.
Source : Reuters
