Why the Raspberry Pi share price is on everyone’s minds right now

Jon Smith reviews the 14% jump in the Raspberry Pi share price today as part of the successful IPO of what could be the new darling UK tech stock.

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In recent months, the UK stock market has been under pressure. Some large existing firms have been mulling moving their listings over to the US. Others have turned down the potential to go public in the UK, favouring other markets. So with the launch of Raspberry Pi (LSE:RPI) today, it’s a big deal. Based on the early trading performance of the Raspberry Pi share price, there’s a lot to be optimistic about.

Let’s get down to business

This is an incredibly interesting company, besides the slightly wacky name! It makes single-board computers (SBCs), which is a complete computer built on a single circuit board. Although it’s not completely unique, the business has a strong reputation for building good quality hardware at an attractive price point.

Demand for the SBCs has rocketed recently, in part due to the wide range of users. It has also benefitted from getting on board with the artificial intelligence (AI) train. For example, it recently announced an AI board for vision capabilities, as a collaboration with Hailo.

ESG investors will also be keen on Raspberry Pi, given that the firm was originally set up to help provide computer education at a non-profit level. It’s still involved in some of these activities, which boosts its credibility as a company with a strong social agenda.

The IPO today

Despite being formed back in 2012, the firm went public on the stock market with conditional trading on Tuesday (11 June). Conditional trading is for institutional traders in the first couple of days of the stock going live. It’s a short period to ensure there are no hiccups, before making it freely traded for all. From an IPO price of 280p, it gave the company a market capitalisation of around £541.6m.

It jumped 35% in early trading on Tuesday then 14% today (14 June), showing the strong demand that investors have for the company. Part of this is thanks to the company financials. Although we don’t have a huge amount of history to look at (as private companies don’t have to declare as much detail as public ones), I can see that revenue for 2023 was £209m, with a gross profit of £52m.

It claims that the market size for industrial, embedded, enthusiast, and educational computing stands at £16.5bn. Therefore, there’s a large potential for the company to grow in the future. In fact, now that the company is public, it should be able to accelerate growth as it can raise money easier and faster.

Small fish in a big pond

One concern I do have is the competitor risk. Raspberry Pi is very good at what it does. But the market cap is a drop in the ocean when I compare it to the large US tech giants.

I think there’s a possibility that the business gets bought by a larger competitor, or that a company comes and muscles Raspberry Pi out of the market due to having deeper pockets.

However, there’s no indication of that happening right now. Given the success story of being listed in the UK and being a hot tech stock, I think the share price could do very well. On that basis, I’m thinking about buying the stock shortly, as it’s now available for the public to buy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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