Categories IPO, Technology

IPO News: All you need to know about DatChat’s stock market debut

The tech firm is offering 2.9 million shares at a price of $4.15 apiece, which is expected to generate net proceeds of around $12 million

Just eight months into the year, stock markets in the U.S have already recorded more IPOs than they did in the whole of 2020, with technology and healthcare firms topping the list. DatChat Inc., a company focused on information security services powered by blockchain technology, recently priced its initial public offering.

Services of the secure messaging app are designed to meet the growing demand for online privacy, at a time when the call for social media censorship is getting louder.

2.9 Million Shares

The New Jersey-based tech firm is offering 2.9 million shares at a price of $4.15 apiece. The offering is expected to generate net proceeds of around $12 million. The lead book-running manager in the offering is EF Hutton. The Nasdaq Global Market has given the green signal to list the stock under the ticker symbol DATS. The stock is scheduled for listing on Tuesday.


Read management/analysts’ comments on quarterly reports


Meanwhile, the management has revealed plans to use the proceeds from the offering mainly for product development and marketing, besides general corporate activities.

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Earlier, DatChat had issued 398,499 shares at $4 per share between January and March 2021, in private placements. According to the management, the company is unlikely to generate revenue and become profitable in the near future. Neither does it plan to pay any cash dividends in the near term.

Message Encryption

The platform offers solutions that allow customers to use messaging platforms in a secured manner, mainly by having control over messages and posts even after they are sent. Its features include options to hide secret/encrypted messages behind a cover and delete chats permanently from both the senders’ and recipients’ devices without any timeframe.

The application can also disable screenshots of messages sent to a recipient. Currently, the company is developing a feature that helps users have control over the forwarding of their messages by recipients.

Risks

The lack of a strong customer base and absence of revenue are the primary risks facing DatChat. Also, its heavy dependence on the smartphone market, which is subject to rapid technological changes, would demand constant innovation.


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However, DatChat’s offerings are highly relevant in today’s world where there is growing concern about the threat to freedom of speech, especially in social media.  The company was originally incorporated in December 2014 under the name YssUp Inc. and was renamed to DatChat Inc. a few months later. It was founded by Darin Myman, who has served as the CEO since then.

Financial Data

DatChat incurred a loss of around $979,470 or $0.07 per share in fiscal 2020, which marked an improvement from the previous year when it suffered a loss of $6.56 million or $0.51 per share. Total operating expenses increased 11% to around $1 million last year. General and administrative expenses were almost flat at $0.3 million.

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