Today, investors in Hippo (NYSE:HIPO) and HIPO stock have seen a relatively interesting start to trading today. The insurance technology (insurtech) company has been one of the most highly touted special purpose acquisition company (SPAC) mergers of late, due in part to its founders. Both LinkedIn co-founder Reid Hoffman and Zynga co-founder Mark Pincus led this reverse merger.
Shares of HIPO stock briefly traded as high as $10.81 per share in early morning trading before falling below the $10 SPAC initial public offering (IPO) price in afternoon trading. Investors appear to be factoring in a relatively significant amount of uncertainty with this SPAC, considering the turmoil Hippo has seen prior to its SPAC merger.
Essentially, a significant number of investors in this SPAC merger pulled their money out of the deal. Approximately 83% of the capital raised by the SPAC has been withdrawn, and only 19.2 million of the 23 million shares scheduled to be issued were sold. Indeed, that’s a significant capitalization hit for this early stage company looking to raise capital.
It appears early investors are content with holding their options in HIPO stock, rather than shares. This implies higher risk, making today’s decline below par value reasonable in this light.
With all this said, let’s dive into a few things investors may want to know about Hippo.
HIPO Stock Faltering on Market Debut
- Hippo is among a growing number of insurtech companies looking to innovate and improve upon the centuries-old insurance industry.
- The company’s business model is focused on providing home insurance products to its customers.
- Hippo’s business is based in Israel and follows a string of Israeli SPAC deals.
- The company debuted in the market on Tuesday at a valuation of $5 billion.
- Approximately $550 million was raised as a result of today’s IPO.
- The company plans to use these funds to expand its existing offering and technology platform.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
