LONDON’s appetite for highly-valued technology stocks will be fully tested today as conditional trading begins in the shares of Just Eat, the online takeaway food group.
Bankers to the share issue, the first on the London Stock Exchange’s high growth segment, closed the books last night and intimated the valuation for the group would be at the top of the price range.
This suggests a market capitalisation for the company at more than £1.4bn, giving it an earnings multiple of around 100 times.
Some City observers such as Michael Hewson of CMC Markets reckon the valuation makes the group’s shares “a punt for the brave.”
“Even for a technology stock, which this company appears to be being labelled as, this is a rather pricey valuation,” he says. “In its defence the company did generate £96.8m in revenues in 2013, which is an increase of 60 per cent on the year before, and if it continues in this vein then the valuation might be justified.”
The prospectus for the issue is due to be published today, with shareholders keen to see how much stock existing shareholders are selling as part of the deal.
Just Eat’s entry onto the market follows signs that not all new issues are guaranteed a comfortable start. Boohoo shares recently dipped below their issue price before recovering.