There has been a very long waiting list of companies sitting in the "application" area of the WSE since it's inception a few months back. This was a new feature added for the market to decide on the worthiness of an IPO application and not just rely on the manual process of the members of WSE. This allows far more scrutiny of the companies, the CEO's and the business plan.
Not many have succeeded through this process to date with MH Motors (CAR) being one of the first, after waiting around 9 months!
Adding to these new market regulatory measures is the newly announced Listing Rules that hit the market on Monday. The continuing maturing of the market is providing a much needed strength to the overall feel of the equity exchange and indeed the SL/Virtual economy.
Two points of note:
- The entity's main Business Activity at the date of admission must be the same as it was during the previous 90 days. - Good or bad? I have seen many companies change COMPLETELY their focus and this would just not happen in RL without a complete restructure and name change and plenty of documentation to go along with it. Not sure how this one will pan out in the ever changing world of SL?
- The entity's total revenue from continuing operations for the previous 90 days must exceed L$300,000 or WIC$1,100.00 - That will seriously impede the struggling stocks/companies from overstaying in a declining business. If revenue drops significantly, the usual practices have included secondaries and other activities to draw as much liquidity into the failing company before the CEO makes a run for the door. On this point, and I need much more time to analyse all the up-coming companies, I would like to ask your opinions and any of the CEO's opinions on this option and how it will effect their business plan/model.
In other news (not related to this post) I thought you all might like to see something funny:
Sincerely,
Logansan Oh
CEO, Chairman
1 comments:
Here's my two cents:
1. This is good. Reason being that people should be investing in stability, not companies that want a quick buck for growth and then in the end, leave or fail as a business due to poor management on the CEO's part. Another reason is that since Luke is going to start bringing in RL investors into the equation and having people day trade in WIC's, Luke doesn't want a RL investor to invest their money in a company that will fail in 90 days anyways. That will loose customers. Luke is in the business of traders. As long as people are trading, he makes a buck. If businesses are failing, it will deter investors from pouring their money into an unstable market.
2. Not only does Luke want businesses that are stable for at least 90 days, but he also wants businesses that actually MAKE MONEY. This is no surprise again because you have your companies that rely almost wholly on their IPO to actually survive. They aren't really making a profit, but just need money to actually get the business going. In some aspects, this will help businesses who are already in business and are making money. This will HURT real estate businesses we've all seen that ABSOLUTELY MUST HAVE L$38 Million to actually get off of the ground.
So yeah, I can understand why Luke is doing this for two primary reasons, stability and profitability. No one wants to invest in stocks that don't have a stable business and aren't profitable.
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