Dubai-based Middle Eastern social networking company Yalla (NYSE:YALA) -- which (according to Google) roughly translates from the Arabic as "Hurry up" or "Let's go" -- is a new stock that had its IPO a week ago.
And what a week it's been! After trading began at an offer price of $7.50 per American depositary share, Yalla opened at $9.75 (30% above the offer price) then closed the day at $7 (7% below the offer price). The stock continued to fall in subsequent days, ultimately bottoming out Monday 12% below its offer price at $6.60. It closed today up 11.2% from yesterday's close.
Things have improved recently. Despite no obvious news of note, Yalla shares began turning around on Monday, and are now up more than 40% off their lows. At its recent share price of $9.05, Yalla was finally back up above its offer price, even if not quite as high as the price at which it began trading a week ago.
No one on Wall Street has been talking much about Yalla since its IPO, and because the stock's underwriters are still waiting out their post-IPO quiet period, there's unlikely to be any positive analyst commentary for another couple of weeks. In the meantime, investors are just going to have to evaluate this stock on its fundamentals. (I know: So boring!)
Still, the good news is that from a fundamental perspective, Yalla actually looks moderately attractive. In contrast to many recent IPOs, for example, Yalla is profitable ($42.7 million earned over the past year) and free-cash flow-positive (throwing off $37 million in cash profits). At $1.3 billion in market capitalization, it's not an obvious bargain, costing about 30 times trailing earnings and 35 times free cash flow, roughly the same valuation as Facebook. But when you consider how young Yalla is, having been set up only in 2018, the company has a lot more room to grow.
In a stock market as pricey as the one we have now, I actually think Yalla stock looks pretty mumtaz (excellent).