The first-ever Filipino tech company to go public had a rough 2016

Photo credit: Tech in Asia.

It’s been a rough couple of months for mobile tech company Xurpas, the first-ever Filipino tech company to IPO, whose stock fell 49 percent last year.

Xurpas started 2016 really strong. It went from PHP 15.62 to an all-time high of PHP 19.80 on April 14, but then the stock plummeted to close the year at PHP 7.99 on December 29, losing over US$400 million in value. It’s now worth roughly US$320 million.

The buzz around the company’s remarkable growth story made it one of the most highly sought-after stocks in the Philippines since its 2014 IPO.

But concerns about its acquisitions took a toll on investor sentiment, two market analysts we talked to said.

“While Xurpas’ revenue has gone up, its cost and expenses also bloated. That’s one obvious cause of concern,” noted Jun Calaycay, head of research at brokerage firm A&A Securities.

“Its net income was further dragged down by higher equity losses on its acquisitions. The companies Xurpas invested in are either in the beta-testing stage or in the process of ramping up operations – probably one of the reasons investors started selling towards the end of the year,” said Jay Laurel of COL Financial.

Overvalued?

“Investors are realizing that the numbers they see don’t justify their expectations before. The acquisitions will take time to pay off. The stock was overvalued, so investors are trimming the fat,” Jun added.

Xurpas’ listing in December 2014 was closely watched as it marked a milestone for the Philippine tech industry. Its growth also resonated well. Xurpas develops an array of products such as games for mobile users and creates proprietary platforms for the largest Filipino mobile operators. It was one of those rare gems that went straight to IPO without tapping external funding.

With much hype, the company sizzled in its market debut, hitting the 50 percent daily surge cap, which made it one of the nation’s most successful IPOs to date.

Everyone was bullish on the company’s prospects and the caliber of its management, led by Nix Nolledo, a key figure in the local tech scene.

Right after its listing, Xurpas embarked on a buying spree, acquiring assets across Southeast Asia as part of its expansion. While many of those acquisitions increased its topline, they came at a price.

Or undervalued?