Poland’s newest stock listing became the largest company on the country’s main exchange, highlighting investor demand for technology exposure as the Eastern European nation is introduced to Nasdaq-level valuations.
Allegro.eu SA shares jumped as much as 51% to 65 zloty at the start of trading in Warsaw on Monday. The firm and its private-equity investors priced the 9.2 billion-zloty ($2.4 billion) IPO at the top end of a marketed range, cashing in on soaring demand for digital sales as consumers stuck at home indulge in virtual retail therapy.
Before the trading start, analysts at Bernstein estimated Allegro’s enterprise value to earnings before interest, taxes, depreciation and amortization to be about 37, above the likes of Amazon.com Inc and Alibaba Group Holding Ltd, but below MercadoLibre Inc. and European fashion retailer Zalando SE, according to data compiled by Bloomberg.
“Allegro was priced close to global technology leaders as it’s already one of the biggest e-commerce companies in the world, which bring interest of many funds that accept higher valuations, given oversupply of the capital,” Haitong analyst Konrad Ksiezopolski said in emailed comments. “E-commerce is a winning industry during the pandemic, which should help the stock. Time will show the impact from competition of Amazon or AliExpress, which is a real test of Allegro’s valuation.”
The company is betting on the continued expansion of online shopping in Poland, a market of 38 million people and one of the European Union’s most resilient economies. Allegro is touting lower fees, a loyalty program, a high number of local merchants and market recognition to fend off competition. Amazon.com Inc. is still selling its products to Poles from Germany, while China-based AliExpress relies on lengthy shipping processes.
A new wave of coronavirus infections in Poland may also end up benefiting the firm,