After the contribution to the success of the movie “Avatar”, RealD Inc, whose technology was featured in it, descents from heaven to earth its next winning Avatar, the traded on the NYSE RealD Inc (NYSE:RLD) stock.
On Friday, the company’s CEO and Co-Founder ringed The Opening Bell to celebrate the company’s IPO and the beginning of trading of RLD shares on the New York Stock Exchange (NYSE).
Being the next winning avatar, during its debut on NYSE RLD stock was eagerly demanded. RLD shares opened the market with 22.18% above the announced by the company pricing. In a volume of 11,85 million shares, RLD stock closed at $19.50.
With the estimated $89,28 million net proceeds in excess from the offering, RLD plans to repay $25.1 million indebtedness outstanding under the company’s term loan and revolving credit facilities. The funds may be used also for general corporate purposes, including investments in technology. In the company’s prospectus, it is written that RLD may also use a portion of the net proceeds to acquire complementary businesses.
RLD will not receive any of the proceeds from any sale of shares by the selling stockholders. The proceeds to the selling stockholders were estimated at $96,72 million.
Now, the improved cash balance of RLD opens a possibility for further growth.
At the same time, the next winning avatar RLD stock, after the euphoria of the IPO, may descent from heaven to earth and investors may start asking some questions.
One of them may be related to the company’s operational results. RLD financials show that during last three years the reported by the company gross margin is not good enough to cover the operating expenses and to generate net income.[BANNER]
Another issue for consideration when buying RLD stock is the dilution.
As stated in company’s prospectus: “If you purchase common stock in this offering, you will experience immediate and substantial dilution of $14.13 per share as the public offering price will be substantially greater than the tangible book value per share of our outstanding common stock after giving effect to this offering.
The exercise of outstanding options and warrants, which have a weighted average exercise price of $2.11 per share, and any future equity issuances by us will result in further dilution to investors.”
