ReachLocal Stock Jumps 15 Percent On First Day

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A very tough day for the stock market, but not for ReachLocal, which saw its shares jump 15 percent on its first day of trading. As we reported yesterday, however, ReachLocal, which helps small businesses advertise online, priced its shares at $13, instead of the hoped-for $17 to $19, so the IPO generated the company only about $54 million, instead of the up to $100 million it had initially filed to raise. The stock ended the day up $1.98 to close at $14.98. Contrast that with our ContentNextDex of digital media stocks, which ended the day down 3.84 percent.

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Trent Read

The deal priced at $13 a share and of the total 4.167 million shares only 3.316 million were primary shares. The rest were sold by their investors. So of the $54.2 million offering, only $43.1 million went to the company (3.316 x $13). Since the company also has to pay 7% or more of the $54.2 million to underwriters, lawyers, and accountants, that’s another $3.8 million they don’t pocket. Finally, they did owe $6.1 million on the Australian asset they purchased. So they really put about $33.2 million on their balance sheet.

You can check out my full analysis of the offering at the OrangeSoda blog.

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