As the Raspberry Pi share price soars, is it set to be a great UK growth success?

What’s a super successful UK stock market IPO? It’s one we’ve just had, as the Raspberry Pi share price reaches for the sky.

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The Raspberry Pi (LSE: RPI) share price was set at 280p for IPO. Even with the price at the top of the expected range, hopeful shareholders oversubscribed the offer multiple times. The shares quickly rose in pre-market trading.

Then it stormed ahead spectacularly when full trading started on 14 June, opening at a whopping 50% above the IPO price.

And at the time of writing, the shares are up a fair bit further, for a stunning 70% gain, so far.

UK tech stocks

Dan Coatsworth, investment analyst at AJ Bell, said: “There is a widely held view that tech companies only float in the US where they can potentially get a higher valuation. Raspberry Pi is proof that the UK can still compete against the likes of the Nasdaq and attract home-grown champions.

It surprised me to learn that Raspberry Pi planned to float in the UK. And I’ve been surprised to see how well the share price has performed in the short time since. They were both pleasant surprises.

Unlike a lot of tech stocks that float in their early days, Raspberry Pi’s profitable. It’s not a ‘jam tomorrow’ offer that we see so often, and that might help keep the stock a bit more stable than some.

Well, that’s a hope anyway. I still expect to see a fair bit of volatility in the next few years, and today’s investors might have to hang on to their hats.

Nasdaq high

Hitting the IPO when the Nasdaq’s at a big all-time high might also have added to the risk. I mean, the US tech index has soared by 125% in the past five years. And, so far in 2024, we’re well above the highs we saw in late 2021.

The timing’s almost certainly boosted the cash the firm was able to raise. And it will have given a helping hand to the momentum of this first few days of trading.

But is it a good idea to buy into a tech growth stock IPO when the market’s on a high and the bulls are charging? I think that’s less clear.

The future

Looking forward, there’s a big lack of broker forecasts on the stock right now. So it’s hard for private investors to put any kind of valuation on it.

But I’ve seen suggestions that the global market for Raspberry Pi products could read $385m (£303m) by 2026.

The stock’s market-cap stands at £890m as I write, which suggests a price-to-sales ratio (PSR) of close to three. For a tech growth stock, that could turn out to be very cheap.

Some even suggest the whole market for small computing devices could reach £16.5bn. The potential could be big, but it’s a big unknown right now.

Time to buy?

This isn’t a stock I’ll buy as I just don’t go for tech growth these days. But it’s great to see such a successful UK IPO.

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.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Aj Bell Plc. 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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