Stock market is valuing Gain Capital at just $22 million!
After announcing its second consecutive quarter losing money, the stock market continued to punish the shares of Gain Capital (Forex.com), sending them down 13% on Thursday to close at $4.37 -- their lowest level since Gain's IPO in December 2010, and less than half the IPO price of $9.00 per share.
Doing some quick math, that means that Gain Capital's market value of equity is now $151 million (having 34.48 million shares outstanding). Gain has on its balance sheet $129 million of net cash, and no debt. Backing out that cash, the stock market is valuing Gain's entire business at just $22 million.
Gain's share price dive comes at a very inopportune time for the company's major pre-IPO shareholders (private equity firms 3i, VantagePoint Ventures, Tudor Ventures, Edison Ventures, and Cross Atlantic, as well as CEO Glenn Stevens and members of senior management) who have had to wait 180 days after the IPO before selling their shares -- a 180 day post-IPO "lock-up" is typical in many IPOs. That 180 day window expires next month, at which time those shareholders will finally be free to sell their shares.
(Editor's note: The above paragraph is incorrect, as the 180 day IPO lock-up expired last year, during June 2011. Please see comment section below, and thanks to our reader Fisherham for pointing out the error to us).
Gain Capital share price graph from IPO in Dec 2010 to present (source: Google Finance):
For more information of the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.