Last week I was asked by friends whether I would bid for Razer’s (01337.HK) hugely oversubscribed initial public offering.
The US gaming equipment maker, backed by Intel Corp. and Hong Kong tycoon Li Ka-shing, intends to use the fresh funds to develop new games, expand into digital entertainment, acquire assets, etc.
Apart from raising funds, Razer hopes the IPO will help cement its market status and build brand awareness.
The company has an estimated market value of more than HK$30 billion.
However, it has posted losses for two straight years. Investors are keen to know when it will turn profitable.
There are lots of loss-making companies getting listed, such as the parent company of Snapchat.
Many exchanges welcome such firms as long as the industry outlook appears promising.
However, if a company fails to turn the business around after going public or the loss even worsens, the share price could take a dive.
Last week, Razer launched Razer Phone, a smartphone for gamers. The device has a 5.7-inch display featuring a 120hz refresh rate, Snapdragon 835 processor, 8GB of RAM, 4,000mAh battery and Dolby Atmos-powered front-facing speakers.
While Razer Phone’s specifications are mid- to high-end, vying for a share in the smartphone market is a different game for the company. Market acceptance for the model is still uncertain.
The stock is expected to start trading on Nov. 13.
This article appeared in the Hong Kong Economic Journal on Nov. 8
Translation by Julie Zhu
[Chinese version 中文版]
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