Private securities marketplace Forge Global went public today via SPAC merger, but is the company worth investing in at this early stage?
In a truly barren year for newly public companies, Forge Global (NYSE: FRGE) today finalizes its SPAC merger to begin life as a publicly traded firm on the New York Stock Exchange. Let's take a look at some of the details, shall we?
What does Forge Global do?
Forge is a leading private securities marketplace. It provides a service whereby individuals with shares in a private company -- an employee who received equity in an early-stage startup, for example -- can sell their shares to accredited investors.
Forge provides both the marketplace infrastructure and the data and technology services to facilitate these transactions. The company then takes a commission of 5% on each transaction. Forge offers a safe secondary marketplace for typically private assets with significant regulatory backing.
When can I buy Forge Global stock?
Forge Global will start trading today on the NYSE. It will trade under the ticker symbol "FRGE." The firm is foregoing the traditional IPO route, instead going public via SPAC. The private securities marketplace will merge with blank-check company Motive Capital Corp (NYSE: MOTV.U) after agreeing to a deal in September of last year.
Forge Global's financials
Since its foundation in 2014, Forge has racked up roughly 400,000 users and completed over $12 billion worth of transactions across shares of over 400 private companies. The company reported revenue (minus transaction-based expenses) for 2021 of just over $125 million. This represents year-over-year growth of 75%. Trading volume also grew significantly in 2021, swelling by 71% to $3.2 billion.
Unfortunately, more detailed financial information isn't as readily available as it is for other companies. By foregoing the traditional IPO route in favor of a SPAC merger, Forge can bypass the rigorous financial reporting standards expected of a debuting company. As a public company, however, Forge's next quarterly report will give would-be shareholders a huge insight into its true financial state.
Forge Global's growth potential
Forge Global offers a unique opportunity for investors to expose themselves to private equity markets through a publicly-traded company. This offers a potential new avenue of diversification without the need to become an accredited investor. As stated by Forge CEO Kelly Rodriques, "we are excited about our public listing and believe it marks another clear signal in the acceleration of the private market."
And therein is the key point -- investing in Forge Global is effectively a vote of confidence in the continued growth of the private equity industry. Unlocking this market for the average investor is indeed a noble cause, but investors will want to see trading volume continue to increase exponentially.
It may be too early to say whether or not Forge Global will make a solid addition to your portfolio. It's certainly a company to keep an eye on as it maintains a strong value proposition if everything goes its way. Its first couple of earnings reports will undoubtedly spark some interest, and positive results there could force investors to consider buying in.
