News & Analysis

Made.com shares at all time low

Andrew Saks, Tuesday, 27 July 2021

This year, despite the enormous challenges faced by so many businesses across the Western world, has been a year of massive interest in public listings.

The reality is that the market for new listings on the London Stock Exchange is the hottest that it has been for four years, with many insiders taking a view that it is likely to continue.

Whilst it is very encouraging to see companies forging ahead with expansion plans and capital-raising exercises such as listing on public exchanges, there have been one or two for whom it could have gone better.

Furniture manufacturer MADE, which makes a specific point of its online nature in the official name of the company which is Made.com Group PLC, is one example.

No matter how trendy the company's product is, its high-profile advertising and current means of capturing the mood of the moment with its fully online sales methodology, investors have been very conservative and are approaching its stock with trepidation.

Today, the company's stock is down again, this time to its lowest point since its Initial Public Offering (IPO) last week.

Made.com's first day of trading which was in mid-June, was something of a damp squib, its shares dropping by 7% on the opening day of its stock market debut, a trend that has remained slightly down since, until the last two days when it dropped sharply.

Shares in the company are now trading at 170p, substantially less than the 197p value on the first day of listing.

A quick search across mainstream media will show many paid editorials from Made.com in tabloid newspapers just after the public listing of the company, making a massive attempt to attract attention to 'flash sale' discounts, with Made having pushed a series of sales via high profile advertising, often showing 40% off products.

That is possibly a factor in the ever-decreasing value of Made.com shares, as well as the reality now demonstrating itself via the public trading of shares which are subject to market value rather than the pre-IPO values that are often publicized by companies looking to drum up massive earnings once their firm becomes listed.

Made.com was being valued at between £750 million and £1 billion in the immediate advent of its IPO, however the reality is that it raised around £100 million post-listing, therefore perhaps indicating that it was overvalued pre-IPO.

Either way, its shares are now priced very low, and the paid advertorials aimed at driving huge flash sales are still very much present on the internet, and furniture retailers which have massive banners saying things like '40% off flash sale' are often synonymous with clearances.

Thinking back to the days before online shopping, how many times did you go to a retail park or high street, to see massive 'closing down sale' and 'everything must go' banners on furniture stores? That's right. All the time, therefore it is not a good look to see the online equivalent splattered across all categories of media from lowbrow tabloids such as the Mirror, as well as respected newspapers such as the Independent.

Of course, it is not a penny stock yet, and these are early days. The formula is right, its an online model which is similar to that of Victorian Plumbing which listed on the same stock exchange at a similar time and has been a massive success story.

Capturing the mood of the moment is one thing; getting investor traction is quite another!

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