I like a few things about the IPO announced today by Newegg.
First, I like that the company — a web-based retailer of computer products for businesses as well as of consumer electronics — is taking advantage of a window of opportunity on the equities markets.
At least for the moment, sunny rays of optimism have broken through the dark clouds of despond. Conditions could change again, though, so Newegg is striking while the markets are comparatively hot (hey, tepid is the new hot). The psychology of American investors, in particular, could be negatively influenced by chronically constrained consumer spending domestically.
I also like what Newegg wants to do with a portion of the IPO’s $175 million in proceeds. The company wants to expand its business operations in China, where it is seeing considerable growth. It’s a smart move. The Chinese economy has continued to grow throughout the worldwide downturn, and it will grow faster as China’s consumer class reaches critical mass in the next five to ten years. A strong presence in high-growth China could insulate Newegg from slow growth in North America. (The company also is expanding into Canada.)
Finally, I like that Newegg is responding proactively to competitive threats, seeking to preclude incursions into its established markets while moving aggressively into new ones.
The timing of Newegg’s IPO, as well as the underlying strategy and use of proceeds associated with it, has been well considered.