Over the past 5 years, a large number of companies have been listed on First North Denmark. We take a closer look at what the best-performing companies have in common, what has happened since the New Year and a possible IPO success in store.

The IPOs on Nasdaq First North Denmark over the past 5 years have been disappointing to say the least, with only 6 of the shares delivering a positive return. In the venture community, the mantra is often that if you invest in enough startups, you will eventually hit the one company that generates all the returns. However, this has not been enough on First North, where IPOs over the past 5 years have delivered an average negative return of -35%. Thus, First North Denmark has not been a platform for index investing. However, investors have in many cases been able to reap large returns on relatively quick exits after the first day of listing, such as Odico, which generated a return of over 250% within the first days of listing.

Many of the companies got off to a good start, and during the corona epidemic, many of the companies were at all-time highs. However, since the peak in February 2021, the KPFNDK index, which tracks the Danish First North shares, has fallen by 57%. The large declines are partly due to investor distrust, with too few companies delivering on their IPO promises. In addition, rising interest rates globally have hit growth companies particularly hard, as their cash flows are many years in the future. As is normal in a down market, trading volumes have fallen in line with the price declines.

Price development for IPOs on First North Denmark over the past 5 years

3 well-performing stocks with more than 100% return

Among the IPOs in the last 5 years, only 3 companies have generated a return of more than 100%. However, the 3 companies have a number of interesting similarities. The three companies have had successful products with strong sales growth over the past few years, they have repeatedly beaten their own expectations with upward adjustments as a result, and they all expect a positive EBITDA for 2023. Earnings are not great, but the companies are growing rapidly, and the focus is on scaling the business to prepare for the main stock exchange.

FOM Technologies (350% – listed in 2020) sells industrial machinery and equipment used for grinding and cutting materials and for various production processes. The machines are resold under their own brand, and in addition to the main business, they offer complementary services and technical support and maintenance. The share has a market value of 304 MDKK. The company has had an annual revenue growth rate of 59.87% over the past 3 years and for 2023, revenue is expected to be in the range of 55-60 MDKK and a positive EBITDA of 2-5 MDKK.

Shape Robotics (163% – listed in 2020) has developed a modular robotics platform used for educational purposes in programming and innovation. The products are mainly sold ready-made, but users can also build their robots based on their own needs. Customers consist of schools and universities. The share has a market value of 325 MDKK. The company has had an annual revenue growth of 121.84% over the past 3 years and in 2023, revenue is expected to be in the range of 130-140 MDKK and a positive EBITDA of 3-5 MDKK.

Scandinavian Medical Solutions (120% – listed in 2021) is a Danish distributor of used medical equipment. Their product range includes CT and MRI scanners, as well as ultrasound and X-ray equipment. The company operates its sales globally and its customers are mainly hospitals. Scandinavian Medical Solutions was founded in 2018. The share has a market capitalization of 301 MDKK. The company has had an annual revenue growth of 52.45% over the past 3 years and for 2023, revenue is expected to be in the range of 150-160 MDKK and a positive EBITDA of 18.5-20.5 MDKK.

Both FOM Technologies and Shape Robotic are planning to be listed on the main stock exchange in Copenhagen, where increased attention from investors and analysts may lead to further increases.

Share price development for FOM Technologies, Shape Robotics and Scandinavian Medical Solutions since the beginning of 2022

Is the turnaround underway?

Since the start of the year, KPFNDK has fallen 2.7%, while the Thomson Reuters Venture Capital Index in the US has risen 22%. This suggests that interest is returning to growth companies, and it may be a matter of time before the increases on First North are back. The best-performing stocks since the New Year have been those that have previously suffered large price declines. At the forefront are Scape Technologies, Nexcom, Alefarm Brewing, Samesystem, OrderYOYO and Conferize, which have fallen 61-99% since their respective IPOs.

Price development for shares listed on First North Denmark in the last 5 years

Orderyoyo could be the next stock market success

OrderYOYO in particular can be interesting to follow, as the stock has many of the same similarities as the stock market successes. OrderYOYO specializes in developing software solutions adapted to the restaurant industry. The software is proprietary and is mainly used for order placement, payment solutions, marketing and administration.

From 2019 to 2022, the company grew revenue from 76 MDKK to 149 MDKK, and in 2023, revenue is expected to reach 215-230 MDKK, corresponding to 43-54% growth compared to 2022. With a market cap of 473 MDKK, the stock trades at a forward P/S multiple of 2.05-2.2. Most recently, the company acquired Kingfood as part of a consolidation strategy that raises their annual recurring revenue (ARR) to 245-255 MDKK. Last year, the company had a loss of 48 MDKK, but for 2023, EBITDA of 13-18 MDKK is expected.

In other words, OrderYOYO is an investment case with strong growth, positive EBITDA expectations and a clear strategy to consolidate in the Nordic market. The stock was listed in the summer of 2021, and since then there has been a lot of market turmoil. OrderYOYO looks like a somewhat overlooked investment case where positive earnings act as a trigger event to reverse the price development.

Price development for OrderYoyo vs. KPFNDK since the IPO in the summer of 2021