eFuture's IPO Was Severely Underpriced

eFuture Information Technology Inc. (EFUT), a leading provider of integrated software and professional services in China's supply chain market, closed its initial public offering of 1,133,500 ordinary shares at $6.00 per share and began trading on the NASDAQ Capital Market on Wednesday, November 1.

Since then, the stock has risen to its current share price of $43.60, higher to the tune of $14.11, or 47.85%, in today's trading session alone, following another meteoric rise in share price yesterday of 48%. With the dramatic run in share price just days after eFuture began trading, management cannot be pleased with its underwriter Anderson & Strudwick Inc. The average IPO typically leaves about $9.1 million on the table. In other words, money left on the table is lost capital that could have been raised for the company had the stock been offered at a higher price. However, judging by the market reaction and buyer interest that has pushed the stock incredibly higher, the stock appears to have been severely under priced and much more money than that was left on the table.

EFUT 10-day chart:
click to enlarge

Comments

[Brian Harris]

What kind of idiot analysis is this? Were IPOs like TheGlobe.com and other Internet bubble stocks underpriced? I think not. Time will tell if EFUT was underpriced.

[STLPlace]

I believe the author should look at the SEC filings before making such a statement.

www.sec.gov/Archives/e...

There are not too much stuff in the financial portion of the document. But the rev is only USD 5 m for the
last year. And that's the first time I heard about the underwriter Anderson & Strudwick Inc.

[GreenAB]

what a joke.

given the IPO filing which includes the latest earnings the stock was not cheap at 6 and is way overvalued right now.

the driver behind this thing is the small float (look at the crazyness at NMX)

[CevicheFundPartners LP]

Don't blame the bankers, the float is tight and all Chinese stocks are laden with speculative fervor.....