Executing an historic initial public offering is one thing, keeping your company’s shares from undergoing wild price swings is another.
A Regulation A+ offering, nicknamed “IPO lite,” allows a smaller private company to raise up to $50 million annually by selling company shares to both accredited investors and the general public. The sale to the public occurs through a crowdfunding campaign on a web portal. (Myomo’s equity offering was conducted on Banq, an online investing platform run by TriPoint Global Equities.)
Myomo raised $5 million by selling 665,498 shares of its common stock to the public at $7.50 per share. A simultaneous offering to accredited investors — most of whom are early Myomo investors — raised an additional $2.9 million. Then, on June 12, Myomo shares began trading on the NYSE under the symbol, “MYO.”
But since Myomo stock began trading, its share price has been volatile. MYO climbed to $23.20 on Monday, only to fall back to $17.51 early Tuesday, and then rebound a little, to $19.70, later this morning.
Companies that use Regulation A+ really can’t avoid listing on a stock exchange. The securities sold become freely tradable, so even if a company doesn’t list on an exchange an investor could take his or her shares to a broker-dealer to sell. The broker-dealer would go to the Financial Industry Regulatory Authority and be granted a ticker symbol.
Broker-dealers and crowdfunding portals that have an interest in seeing Regulation A+ transactions take off are probably hoping that Myomo’s share price stabilizes. As of December 2016, 165 companies had filed with the SEC to do a Regulation A+ offering, but the success stories have been few and far between. None of them has made it as far as Myomo and earned a spot on the NYSE.
That’s a significant achievement for sure, but what happens next will have a bigger influence on whether Regulation A+ offerings followed by a listing on a major stock exchange become an accepted path to the public markets.