Knightscope, a company that has raised growth capital via multiple crowdfunding rounds, commenced trading on the NASDAQ yesterday under the ticker symbol KSCP. The listing on NASDAQ was announced during its most recent crowdfunded securities offering listed on StartEngine.
As of today, shares in Knightscope are trading below the offering on StartEngine that closed on January 14, 2021. Kinghtscope raised a total amount of over $22 million on StartEngine at a pre-money valuation of $535 million at $10 a share. Shares of Knightscope are trading at around $7 today representing a 30% haircut for investors who purchased shares on StartEngine. Knightscope raised capital using the Reg A+ exemption, sometimes described as a min-IPO, which allows an issuer to immediately trade shares on an ATS or exhange following the completion of a securities offering.
On the offering page, some investors were disgruntled by the rapid decline in value for Knightscope. One commented:
“Please explain to me why stockholders should have confidence in a management team that completely mis-managed the IPO. Valuing the company at $535 million was outrageous. At yesterday’s low that value was chopped down to $320 million. Until KSCP can show a clear path to $100 million in annual revenue I fear we’re all doomed to selling for a loss.”
Other investors indicated they were in it for the long run and more willing to endure the volatility.
In a report by Silicon Valley Business Journal, Knightscope explained that it floated its shares on NASDAQ as under the Reg A+ securities exemption it had to publicly report its financials without the benefit of access to public markets – something they can now tap. Knightscope CEO William Santana Li stated:
“We are excited about being able to get access to the wider capital markets now. We have had all of the negative aspects of being a public company without any of the benefits until now. We needed to get the company out of purgatory, so to speak, to be able to actually grow.”
Li also noted that they floated their shares during a week when the market was in a huge decline. Fears of inflation and rising interest rates has engendered a significant market correction for the entire market. He did explain that Knightscope is in the midst of a federal review which could end in the company providing services for the government – an event that could be a big win for the company.
While Knightscope is trading at a big discount to its offering price, one day of trading is not indicative of future valuations. If Knightscope can execute on its vision, fortunes may change for investors. For now, crowdfunded investorse have gained a path to liquidity so they hold the decision as to whether, or not, to go along for the ride.
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