Surge on Debut: Xoom Corp

Xoom Corp (NASDAQ: XOOM) receives thumbs up from investors and 15 February 2013 when the stocks of the company opened at just over $20 which represented a 30% increase from its initial offer price of $16 per share. The company that enables its clients to wire money across several countries provided NASDAQ a jump of over 30%. At the day’s closing the trading for Xoom Corp ended at $23.05 which was a 44% increase from the initial offer price.

Xoom Corp based out of San Francisco allows US residents to utilize their smart phones and computers to send cash from United States to over 30 different countries. The company generates its revenues from the transaction fees charged on each transaction from the sender and the receiver. Through the Wall Street Journal the chief executive, John Kunze spoke about the company being a disruptor by providing digital services to its clients for wire transfer.

The executive also noted the marketing efforts of the company which helped the company meet demand from several investors in stocks of small capitalization who were mainly interested in financial and technology sectors. The technology of Xoom Corp allows for quick delivery of cash to banks so that clients can get rid of the requirement for delivery of money at agent locations. The main competitors of Xoom Corp include Moneygram international Inc and Western Union Company. In the remittance market which mainly involves clients/immigrants sending money back home to family members and friends Xoom Corp reported a growth of over 2%.

The remittance market has expanded substantially to include countries such as Nigeria, Mexico and India causing the remittance market to be valued at over $400 billion. Xoom Corp started by capturing 2% of the remittance market and slowly growing its hold to a current 4% of the entire market. Investors are hoping for further increase in the share prices as the company adds more customers to its already burgeoning list especially those clients who have been going to different locations, waiting in lines for the wire transfer and now can perform it online. This would be one of the main reasons for the growth in market share of company.

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On 14 February 2013 Xoom Corp released 6 million shares in its IPO with the initial range of between $13 and $15, indicated in the documents filed at the Securities and Exchange Commission. The current stockholders of the company sold more than 1 million shares of Xoom Corp which provided the company an approximate $100 million. Even though some investors consider the stocks of Xoom Corp to be risky the company had experienced a revenue growth of over $60 million in 2012 which was a 50% increase since 2011.

The company has now pegged its annual growth rate at 88% since 2007. With 75% of the revenues of Xoom Corp coming from wire transfers to India, Mexico and Philippines investors are hopeful of seeing substantial increase in the share prices of the company, the shares of Xoom Corp are hence being considered to be one of the best performers of 2013.

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