London-based entertainment listings publisher Time Out bombed on its first morning of trading on London's junior AIM market on Tuesday, as the shares slid from 154 pence at the open, to a low of 130 pence.
The shares, which began trading with the ticker TMO on Tuesday, later recovered slightly to trade at around 135 pence.
The decline came despite an apparently successful private placing of its initial public offering last week at 150 pence a share, when the company raised GBP90 million ($127.5 million), giving it a market capitalization on admission of GBP195 million.
But while the company said it planned to use the money raised to invest in growth and build on its "attractive unit economics," investors were also alerted to its recent losses. Despite claiming an audience reach of 111 million worldwide, it made an operating loss of GBP18.5 million on revenue of GBP28.5 million in 2015.
An note from analyst Alex DeGroote at Peel Hunt issued on Tuesday said the company was unlikely to be Ebitda positive before the 2018 fiscal year. DeGroote called the share "a wait and see story," but added that across the media sector, the prospects for print remain weak.
As well as warning that investors would have to buy into the growth story in the digital space rather than print, which is not a value driver, DeGroot said: "Digital advertising is a tricky space, with ad blocking, ad fraud and low yields all threats."
But as well as investing in its print and digital publications, Time Out made much ahead of the float of plans to put about GBP20 million of the IPO proceeds into the roll out of its food and culture hub concept Time Out Markets. The company tested the first Market in Lisbon, where it has become a tourist attraction in its own right. But Time Out sees London, New York, Berlin and Sydney, Australia as targets for expansion.
DeGroote's note said this was the other area where investors would have to buy into the growth story. But he also pointed out that the company already has brand equity and a presence in multiple territories, which he said "should de risk execution."
Time Out's main backer remains private equity group Oakley Capital, a London-based investor chaired by Peter Dubens. Time Out has a presence in 107 cities in 39 countries and about 50% of its audience accesses the product through mobile devices.