This year, the market would witness some of the most-awaited initial public offerings, including those of Stripe and SpaceX, if everything goes as planned. After the disappointingly low IPO activity in 2022, with very few successful listings, expectations are high this time. MGO Global, Inc, which manages the clothing and lifestyle brands of soccer superstar Lionel Messi, is all set to debut on the stock market.
The Messi Factor
MGO Global provides branding and marketing services that help businesses increase their visibility. It mainly manages the designing, marketing, and distribution of footwear, apparel, and accessories. The timing of the IPO shows that the company is probably looking to capitalize on Argentina’s recent World Cup victory, under Messi’s captaincy. As per the licensing agreement, which is valid until late 2024, MGO Global can develop and market Messi-branded apparel and accessories during the contract period.
The Florida-based company is planning to offer around 1.5 million common shares in an initial public offering – the date of the offering will be announced later. Assuming the offer price of $5.0 per share announced by the company, the IPO would generate total proceeds of about $7.5 million. It will value the company at $66 million.
Boustead Securities and Sutter Securities are the underwriters in the offering. The management has applied to list the stock on the Nasdaq Capital Market under the symbol MGOL. Funds raised through the offering will be used for general corporate purposes, mainly as working capital. If the listing occurs this week, as scheduled, it would be one of the earliest IPOs of 2023.
In the nine months that ended September 30, 2022, MGO incurred a net loss of $2.1 million, which is sharply wider than the $ 0.4 million loss reported in the corresponding period of the previous year. The weak bottom-line performance can be attributed to a 40% fall in net sales to $0.34 million and a sharp increase in operating expenses.
MGO Global was co-founded by Ginny Hilger and Maximiliano Ojeda in 2018. Being a loss-making business, the primary risk facing the company — from the investment perspective — is the absence of a proper roadmap to becoming profitable. Also, the overdependence on a single client would be a risk to growth in the long term. The company operates in a highly competitive industry where it might face competition from leading athletic brands.
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