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June Newsletter

Company Profile, Investing in an IPO, Inside Investify.

Company Profile: My Food Bag Group Limited

Source: Investify financial insights dashboard (as at 29/06/21)

Business Summary

My Food Bag is an online food delivery business and New Zealand’s longest standing meal kit provider. It engages in e-Commerce with direct-to-consumer service for food and other household needs. The company was founded in 2013 and is headquartered in Auckland, New Zealand. Each week My Food Bag delivers thousands of bags full of nutritious, locally sourced ingredients along with easy-to-follow recipes to families across New Zealand. The company offers a broad range of meal kit bags in New Zealand through the My Food Bag, Bargain Box and Fresh Start brands and offers a range of ready-made meals through the MADE brand. My Food Bag was listed in the New Zealand stock exchange with an initial public offering of $1.85 on March 5th, 2021.

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Investing in an IPO - good idea or a bad one?

An initial public offering, or IPO, is the very first sale of stock issued by a company to the public. Prior to an IPO, the company is considered private with a relatively small number of shareholders made up primarily of early investors (such as the founders, their families, and friends) and professional investors (such as venture capitalists or angel investors).

An overflow of Initial Public Offerings (IPOs) hit the market when the market is in an upward direction (bull run) and investors clamour to subscribe to most of these IPOs, hoping to make a kill on listing. However, IPO investors don’t always make a profit as has been proven time and again. In fact, in many of the IPOs, investors have suffered huge losses. Nevertheless, the herd mentality of the investors drives them to subscribe to IPOs. Of course, there is no denying the fact that there have been many IPOs that have given investors huge returns in the past, but these are more of honourable exceptions rather than a rule. The fact remains that most of the IPOs provide negative returns when markets have gone into a downward phase (bear run).

Some key things that an investor should look for before jumping into the IPO:

- The growth opportunity for the company in the sector and industry it operates and how the share price of similar companies performed in the past

- The reason behind raising the funds through IPO. If it is for supporting the future growth, that is a good indicator. However, if it is to cash out existing shareholder, then it should be treated with degree of caution

- The people behind the company and their track record. It is important to know how involved the founders will be in the future as they will be the main driving force and, in most cases, not a new hot shot CEO or new management that will come in.

Therefore, investors should not simply chase the IPOs blindly, but must be picky while subscribing to the IPOs. They need to do their homework and subscribe only to the IPOs of the companies that have a great business model, are fundamentally sound and in good financial health. Only then, can they expect to get good returns on their investments.

Inside Investify..

June has been a month of vision and growth for us. We have been initiating a number of collaborations to communicate better with investors out there. So, lots of interesting things to look forward to. Our team had a productive strategy session which has pushed us to focus on improving our service and user experience.

We also got a boost in the sign ups this month and hope to only see the numbers grow as we reach more investors who want to make informed decisions. Any feedback on Investify is always welcome and very much appreciated, so please feel free to tell us what you think about us through the form below.

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