Here’s why Raspberry Pi is flying off the shelves
British computer maker Raspberry Pi went public last week.
It’s not often that a technology company is raised from seed to successful business in the UK, and then makes the decision to press ahead with an initial public offering (IPO) in London.
Understandably, investors in the UK were excited about the recent inclusion of Raspberry Pi on the London Stock Exchange (LSE).
Raspberry Pi shares were off to a hot start but have since cooled down. However, it’s not uncommon for a hyped IPO to drop in price when the buzz dies down.
What is Raspberry Pi?
Raspberry Pi is a British company that’s been around since 2012. It’s a computer maker that focuses on designing single-board and modular computers.
Designed by engineers and computer scientists based in Cambridge, Raspberry Pi teams up with local chip designer Arm (which also recently went public, albeit in the US) and Finnish firm Linux for its operating system.
The key appeal of Raspberry Pi’s computer products is that they’re low-cost, durable and pack a punch when it comes to performance. This has made the computer a star pupil in classrooms around the world, helping the next generation learn to develop and code.
These products have also become a popular choice for engineering facilities and factories that need a high-tech, low-cost solution that can withstand tough conditions. Raspberry Pi has sold over 60 million units so far and even runs an extremely successful charity – the Raspberry Pi Foundation.
Was the Raspberry Pi IPO successful?
Initially, yes. Like with most IPOs, we won’t know the full story until we get some perspective.
The initial share price for Raspberry Pi was 280p, and it began trading conditionally on Tuesday 11 June, which means the shares could be accessed only by certain investors. As a result, the stock jumped by close to 40% to around 392p as initial trading began.
With limited supply and ways to buy shares, the price continued to rise up to highs of around 420p. Then, on Friday 14 June, Raspberry Pi shares became available to any investor with access to the LSE. This full listing led to a further pop in share price all the way up to 440p – over 55% higher than the initial IPO price.
There was plenty of buzz around the possibility of a Raspberry Pi IPO, especially because it decided to list in the UK on the LSE. Last year, the UK missed out on a huge opportunity for the stock market when Raspberry Pi’s co-worker and neighbour, Arm (ARM), decided to go public in the US and list on the Nasdaq stock exchange.
It’s worth noting that while some of the best trading platforms will already let investors buy Raspberry Pi shares, not all of them will.
What happens next for Raspberry Pi post-IPO?
After the initial uptick in the share price, Raspberry Pi’s stock has dipped back down towards the original IPO price and currently sits at around 376p (correct at the time of writing).
If we take the opening price of 420p (the first day these shares were properly available to investors), this means a recent decline of over 10%.
You might think this is drastic, but it’s in line with Finder’s IPO research which looked at the share prices of hyped and trending IPOs from the last 5 years. The research showed that the average IPO share price drop was 11.9% after 1 week (for those that fell in price).
Of the 24 IPOs analysed in this research, 16/24 share prices were lower a week after the IPO and, a month later, 19/24 were lower. So, the odds aren’t in Raspberry Pi’s favour. The first year after debuting is likely to be extremely volatile for these shares and possibly the toughest test for investors.
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About the author
George Sweeney DipFA is a deputy editor at Finder.com, specialising in investing. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, and Online Mortgage Advisor. George is a qualified financial adviser and is regularly quoted in the national media about investing and personal finance.
This article originally appeared on finder.com/uk and was syndicated by Mediafeed.org.