RealD IPO: Hoping for a Sweet View

Jul.15.10 | About: RealD Inc. (RLD)

By Kris Tuttle

RealD [RLD] is nearing the end of the marketing phase of its IPO and the current plan is to price the offering later this week.

RealD is the leading provider of 3D cinema technology in the U.S. and most of our readers have worn this brand of glasses if they have watched a film in 3D. The company has grown very rapidly and is poised to develop a strong franchise with a high degree of recurring revenue and profitability. So far, however, the company has only made rather large losses, having been in an aggressive expansion mode.

Simply put, the proposed filing range puts the stock very close to the IV for 2010 of $15, but there is substantial upside if the company continues to execute. In 2011 the IV expands to $25, since longer-term company profitability begins to get factored into the valuation.

Disclosure: No positions