Frenzy for Freelancer stock
For a brief moment on Friday, a small company that didn't exist four years ago and will barely turn a profit was worth more than a $1 billion.
Outsourcing website Freelancer.com has again shone a light on local technology stocks, with the company doubling in value on its stock market debut.
At midday, shares in the online job-market outfit started trading at $2.50 each - five times the price of 50¢ each they were sold to investors.
In the initial frenzy Freelancer.com peaked at $2.60 giving the company a market capitalisation of $1.1 billion.
However, they ended the day at $1.60 putting the site's value at $697.6 million.
Freelancer.com is a website that allows people to post a job and get freelancers from around the world to bid on it.
The company owns 40 similar sites around the world, including Freelancer.co.uk in Britain.
Its entry on the ASX comes amid a boom in technology stocks in the US and Australia, with foreign exchange trading site OzForex listing locally and Twitter listing on the New York Stock Exchange earlier this month.
Part of the frenzy was a result of Freelancer being tightly held with just 6.9 per cent of its shares sold on the ASX. Its chief executive and founder Matt Barrie retains the lion's share of the company's stock, holding a 46 per cent stake in the company.
The present valuation puts Mr Barrie's paper wealth at $320 million. Mr Barrie described the stock market debut as a "land grab".
He said the company's immediate focus would be to build up its management team.
"It is all about execution and growth," he said.
Seek co-founder and chief executive Andrew Bassat is among a suite of high-profile investors to throw their weight behind the IPO. Mr Bassat said the company was well-positioned to grow its share of the online outsourcing market.
"The market Freelancer operates in is potentially very large and there is plenty of blue sky if the company can continue to execute well," Mr Bassat told BusinessDay.
Freelancer.com is expected to deliver a post-tax profit of $471,000 for the previous financial year. This is down from $728,000 in 2012.
Technology lawyer and investor Nick Abrahams said the number of US companies and investors coming to Australia had jumped in the past six to eight months.
He said companies were now being valued more closely to their US counterparts.
"There's a bit of a revaluation of Australian technology companies to get them closer to US company valuations," he said.
"We're definitely seeing US companies and investors coming to Australia."
He said the latest activity in the tech sector follows the launch of group buying websites such as Groupon, which had fallen in popularity in recent times due to saturation in the market.
While he said the success of Freelancer could also be threatened by a crowding in the outsourcing market, he said the Freelancer's business model had "longevity".
"The business is likely to be more sustainable than group buying sites," Mr Abrahams said.
Freelancer's debut is the 33rd company listing on the ASX this year. It comes amid a flood of listings to hit the market as investors flock to the stock exchange amid record gains in equities.