Clearwire Muted Premium Post-IPO

Clearwire (CLWR-NASDAQ) opened at 10:40 AM EST, and while it is up from the pricing it is not exactly setting any records and some of the wildly bullish minions might be a bit disappointed in the initial trading premium.  Shares priced at $25.00 and have traded between $26.13 and $27.95 in the few minutes since the open.  We had noted that $28.00 seemed to be the prevailing opening level and it appears that $27.25 was the opening price.  That is pretty close, but some are already thinking this was a bit of a disappointment.

The reason for this is that the premium doesn’t give a huge profit for the IPO-Flippers for an IPO that had so much hype behind it.  We in no way are comparing this one to a particular VoIP IPO that came public in 2006 in a botched IPO because that does not look to be the case here at all.  This was just one that some were probably hoping for more. 

Perhaps all of the warnings about the company needing to raise more and more funds even in the near future may have contributed.  Maybe it was the bump in shares from 20 million to 24 million and the bump in the overallotment.  In truth this company has something great to offer, so now it will all boil down to what the public says the value of it is.  As of now, the company is sitting with a market cap in excess of $4 Billion.  Some are saying that it will take another $4 Billion to really deploy its WiMAX cloud in the US.

Here was Cramer’s original IPO playbook on it.  The potential stock and debt sales coming on an accelerated basis may keep a bit of a lid on it, but the company is in the best spot for a pure-play stock in the WiMAX sector.  If I didn’t know better, this sounds like it has all the earmarkings of a true battleground stock for the longs and shorts.  It will take about 30 days before the research reports start coming out from the underwriters, so keep your eyes open for research on it around April 7 to April 9.

Picking how this one will close from here is probably as accurate as a coin toss.  In the first 20 minutes CLWR traded roughly 10 million shares.

Jon C. Ogg
March 8, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.