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How to trade on Alphawave's IPO

Alphawave is a Canadian semiconductor IP company. Its wired connectivity technology helps data travel faster and reliably across global phone networks and computer systems using lower power. The designs are embedded in semiconductors serving data-hungry markets, including hyperscale data centres, 5G wireless infrastructure, autonomous vehicles, solid-state storage, artificial intelligence [AI] and data networking. Alphawave had an initial public offering (IPO) on the London Stock Exchange (LSE) on 13 May 2021 and its shares are now available to trade publicly. Continue reading to find out how to get involved with Alphawave’s IPO and how to trade on newly listed Alphawave shares.

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What is Alphawave?

Alphawave, founded in 2017, has grown to be one of the leaders of its sector, helping tier-one companies, including large semiconductor suppliers across North America, Asia-Pacific countries, Europe and the UK, meet their need for speed.

Why has Alphawave chosen to list in London?

Many observers expected Alphawave to list on either the Toronto Stock Exchange or New York’s Nasdaq stock market, given its Canadian heritage and because the US is a traditional ‘float’ route for technology firms. The disastrous IPO of delivery firm Deliveroo in London earlier this year, which saw its shares slump by around 25% on debut, was also tipped to dampen further tech demand in the capital.

However, Alphawave, said it is “proud” to go public in the UK “where the Silicon IP business model was invented”. It hailed the experienced semiconductor community and local investors who understand the industry.

It also plans to open its new R&D headquarters in Cambridge, UK, which is known as Silicon Fen, for its expertise in the technology sector.

When is Alphawave’s IPO date?

Alphawave’s IPO took place on 13 May 2021 and the company's LSE ticker was revealed as 'AWE'. Trade on our newly listed Alphawave share price >

What will Alphawave’s share price be?

Alphawave has set a price range for its shares between 375p and 430p, where the company was looking to raise around £810m in new and existing stock.

Upon debut, Alphawave's share price plunged by as much as 22% to 310p.

Trade on Alphawave's upcoming IPO

What is Alphawave’s valuation?

Alphawave was expected to be valued at £3.2bn ($4.5bn) when it floated on the London Stock Exchange. However, as its share price dropped by 22% on its first trading day, this reduced its overall market cap to around £2.45bn.

This can be compared with listed silicon IP group Synopsys [SNPS], which has a valuation of around ten times higher. However, it is to be noted that past performance is not necessarily indicative of future results, as we are comparing financial figures between companies.

Synopsys has a price-to-earnings ratio of 54.35, which suggests that investors believe future growth will be strong. This is typical for technology firms as investors tend to have an optimistic view of future demand. Expect Alphawave to have a similar ratio when it floats, given that its leading semiconductor customers are powering high-growth technology sectors, such as 5G and autonomous vehicles.

How has Alphawave performed financially pre-IPO?

Alphawave has been profitable since its first full year of operation in 2018. Its operating profit reached $17.5m in the year ended 31 December 2020, achieving a compound annual growth rate of 207% since the year to 31 May 2018. It generated revenues, from licensing and royalty fees, of $32.8m, up 161% since 2018. It estimates that its total addressable market opportunity will grow from $500m to $1.5bn in 2025. The key to Alphawave’s rapid growth is that it is solely focused on high-speed connectivity IP solutions. It believes it is the only non-US firm to have licensed this technology.

How to trade on Alphawave’s IPO

  1. Register for an account. We offer positions on 9,000 shares as well as ETFs on our platform, which will include Alphawave’s new listing.
  2. Choose whether to spread bet or trade contracts for difference (CFDs). Spread betting is our most popular product, and it is tax-free in the UK*, while share CFDs do not require you to pay stamp duty and are available globally.
  3. Choose whether you want to go long (buy) or go short (sell). Please note that some trading restrictions may apply on initial trading.
  4. Follow market news. Alphawave is a trending company and there are many aspects of the IPO to consider, including its stakeholders, business stance and EU regulations.
  5. Consider risk-management tools. Share prices can rise and drop suddenly on their stock market debut, so it may be worth adding stop-loss or take-profit orders to any open positions in order to prevent capital loss.

Why may investors be interested in Alphawave’s upcoming IPO?

Semiconductors are everywhere — from our mobile phones to our cars and fridges — and will play a crucial role in the evolution of 5G technology, electric and autonomous vehicles, cloud storage and ‘the Internet of Things’, where many different electrical devices are connected. To respond to an ever-expanding data demand from consumers and businesses, there is a critical need for faster and more reliable connectivity.

Alphawave believes it can develop this technology more cost effectively than internal design teams in large semiconductor firms. It claims it is the only pure high-speed connectivity IP provider focused on transmission speeds of up to 112 gigabits per second. It is also developing 224 gigabits per second solutions.

Alphawave is looking to expand into new technology and key regions such as Asia. It also aims to grow recurring revenues via a customer subscription model. The license and royalty fees it receives for every chip sold based on its designs are already very profitable and cash generative.

According to AJ Bell, despite the coronavirus pandemic, global semiconductor sales rose 5% in 2020 to a high of $430bn. The investment platform expects that further economic growth, increased silicon content per unit in cars, mobile phones and data servers, could fuel 8% higher global sales in 2021. The semiconductor IP market is expected to grow at a compound annual growth rate of around 5.5% by 2025, Research and Markets suggests.

What are the potential risks for Alphawave?

There is currently a global supply shortage of semiconductors because of rising demand. Car manufacturers are ramping up electric vehicle (EV) production and more people are at home playing on games consoles and mobile phones. The supply crunch could lead to higher consumer prices, potentially reducing high-tech purchases and delaying the building of EVs and new mobile phones. This could impact Alphawave’s revenues.

Another clear risk is the potential loss of key customers. Rival semiconductor IP firm Imagination Technologies supplied its IP designs to Apple until 2017, when the iPhone tech giant scrapped the deal to focus on in-house developments. This led to Imagination’s share price plunging by 70%.

In addition, IP customers can switch at any time if they want newer designs, or more design control. This means that Alphawave must be careful in developing and keeping a broad range of customers and to keep investing in R&D such as the new Cambridge site.

Keep up to date with market developments in the news and analysis section of the platform.

Who is Alphawave’s competition?

The two main semiconductor IP rivals are Arm Holdings and Imagination Technologies. Cambridge-based Arm was London-listed until it was bought for £23bn by Japan’s SoftBank [SFTBY] in 2016. It is now the subject of a potential $40bn takeover from US semiconductor giant Nvidia [NVDA]. This is being held up after the UK government raised national security concerns because Arm’s IP underpins crucial defence infrastructure.

Hertfordshire-based Imagination Technologies was also London-listed before being bought by Canyon Bridge in 2017. It has subsequently reached a new licensing agreement with old partner Apple.

Alphawave’s rivals have deep pockets — particularly if the Nvidia/Arm deal proceeds, which could make it harder to gain market share. But the growth of the two UK firms also shows what Alphawave’s own future could look like if it keeps innovating.


Where can I trade Alphawave’s IPO?

It is possible to buy stocks directly through share dealing, where you will take ownership of the shares. Alternatively, with CMC Markets, you can speculate on the price movements of Alphawave’s stock, which allows you to trade on both sides of the market. Learn more about this type of derivative trading.

What is the lock-up period on Alphawave’s IPO?

No details have been released on any lock-up period post-IPO. A lock-up period, usually lasting between 90 and 180 days, prevents insiders such as owners or employees who already own company shares from selling them directly after listing. This can lead to share price volatility. It is also not considered a sign of long-term confidence in a newly listed company.

Who is underwriting Alphawave's IPO?

Barclays Bank and JPMorgan are acting as joint global co-ordinators and joint bookrunners. In addition, BlackRock and Janus Henderson are acting as cornerstone investors with commitments of $390m and $120m, respectively.

Is the London IPO market set for a revival?

The UK government is keen to encourage more tech stocks, particularly UK-based companies, to list in London. So far this year, Moonpig [MOON], Trustpilot [TRST] and Deliveroo [ROO] have floated in London, with Alphawave, Darktrace and Oxford Nanopore to follow. According to Ernst & Young, £5.6bn was raised in the first quarter of 2021 in London IPOs, compared with £9.4bn in the whole of 2020.

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