The eventful opening on the stock market of the company that sells Messi clothes | Economie

Messi appears quoted over 300 times In the MGO Global IPO prospectus, Registered with the US Securities and Exchange Commission. There are also many pictures of him. The company entered into an agreement to sell clothing under the Argentine national football team and Paris Saint-Germain. For a dubious company with less than two years left on its contract with Messi, the time to go public seemed perfect, with the footballer Newly crowned world champion with Argentina. The Miami-based company listed on Friday for the first time on the Nasdaq Stock Exchange in the United States and the premiere was somewhat bumpy.

The stock market offering price was $5 a share. The company’s founders and shareholders pre-IPO invested $4.1 million in the company, at $0.35 per share. Without the company demonstrating its viability, the selling price of the new shares was those five dollars. 1.5 million titles were placed, so that new partners placed 7.5 million titles, twice the number of the original partner. However, since they entered at a higher price, they got fewer shares, about 11% of the share capital. The subscription could be oversubscribed by another 330,000 shares, though part of the money would still be on the way due to IPO costs.

At this price of $5 per share, MGO Global It is now valued at about 58 million euros, and the shares of the two main shareholders, Maximiliano Ojeda (CEO) and Virginia Hilfiger (design director and little sister of Tommy Hilfiger) are valued at about 20 million, doubling the value. of your investment of more than 10.

When he started trading shares, Macy’s claim carried more weight than potential doubts about the true value of the company. The price skyrocketed and reached a maximum of $16.61, which means a 232% upside from the offering price and an average return of 4,645% over the price at which the original shareholders invested (this is still much higher for founders and lower for those who got in). capital last year at $1 per share through a private placement).

The party did not last long. After touching this height, the arrows have taken the bottom of the roller coaster to return to the starting point or even a little lower. The price closed at €4.65, which is a 7% loss in relation to the offering price, but no less than 72% for those who had the misfortune to buy at the session high.

Doubts about the company

Even with the subsequent crash, MGO Global, a company with four employees, is worth about $54 million in the stock market. Not bad for a company The prospectus states the following: “There are fundamental questions about our ability to continue as a going concern as a result of our recurring losses and negative cash flows from operations, as well as our reliance on private equity and financing.”

MGO was founded in 2018 and took over its current corporate form in 2021. The company acknowledges that the only asset in its product portfolio is the Messi brand, which it uses in apparel. For this brand they came to an agreement with her The company that manages the business of the Argentine star Leo Messi Management (LMM), Based in Barcelona. The agreement basically states that Messi will receive a 12% royalty from the sales of his brand’s clothing imposed by MGO, but the Argentine star guarantees at least four million euros for a contract that lasts for three years and is not subject to automatic. renewal. So, MGO Global made its stock market debut with two years remaining on its contract with Messi.

In the first nine months of 2022, the first year of the current agreement, the company generated net sales of $336,701, which doesn’t even cover the guaranteed minimum payment for Messi. At the moment, Messi’s style of clothing does not seem to have worked very well.

The company incurred losses during the period from January to September amounting to 1.86 million dollars. It has already incurred significant losses in previous years and expects it to continue. He makes no secret of it in the prospectus: “We cannot predict when, if at all, our operations will be profitable. We expect to incur significant net losses as we develop our business and pursue our business strategy. We intend to invest significantly in our business before we can expect the cash flow from operations to be sufficient to cover Our operating expenses. Of course, the dividend has never been paid nor is it expected to be “in the foreseeable future.”

Prior to the IPO, the company had used up all capital invested by shareholders and had negative equity: “As indicated in our financial statements, as of September 30, 2022, we had a cumulative deficit of $5,072,751.”

The company has estimated it will raise between $5.9 and $6.9 million with the IPO, and said in the brochure that it intends to use 65% (about $3.8 million) for team expansion and marketing. and the remaining 35% (approximately $2.1 million) “for general corporate and administrative purposes, including working capital and capital expenditures.”

Despite its precarious financial situation, MGO Global says it “intends to acquire other apparel companies to add to our portfolio of brands,” though there appears to be no rush: “At present, we have not identified or engaged in active discussions or negotiations.” without the acquisition objective.

The prospectus is full of warnings of risks, starting with the fact that those who subscribed for the $5 of new shares immediately suffered a $4.61 dilution in the tangible book value of the company or that the contract with LMM, Macy’s Corporation, expires on December 31, 2024 and there is no which guarantees renewal. So, there is one that stands out: “Our business could suffer immeasurable damages in the event we lose our relationship with the LLM or breach the terms and conditions of our license agreement.”