Intuitive Aerial AB (STOCKHOLM: INTU) was today (2015-01-13) listed on First North at Nasdaq Stockholm. The listing on First North became successful and the stock rose +10% in the first trading day. Intuitive Aerial is a very small company which started in 2010 as a spin-off from Linköping University in Sweden. They manufacture and sell Unmanned Aerial Vehicles (UAS) or so-called drones, to the most demanding customers in film and broadcast. The company was previously named one of Sweden's 33 hottest technology companies by Affärsvärlden and Ny Teknik (two well-known Swedish newspapers). Sales have more than doubled each year since the business started in 2010.
The company was previously named one of Sweden's 33 hottest technology companies
They have increased from 360,000 SEK in 2012 to over 5 million SEK in December 2014 (today 1 SEK is approximately 12-13 cents: USD/SEK). Before listing on First North, Intuitive Aerial had a successful new issue of shares which ended 10 December. The share issue of 15 million SEK was oversubscribed by 133% because of the great interest they got additionally 3 million SEK. Afterward, it was more than 650 shareholders in the company (I'm glad I was one of them). Before the issue had 13.5 million SEK been invested in the company since 2011 and the issue of shares collected additionally 18 million SEK (before issue expenses). The additional capital will give Intuitive Aerial resources to, for instance, expand marketing in the important North American market, and ensure a technology leadership and increase the development of their product Aerigon.
The interest for drones is increasing rapidly and Sweden are among the countries in Europe where interest in small unmanned craft is greatest. Many people associate drones to some extent by war and destruction, but other applications start to come into focus. Another drone manufacturer in Sweden is CybAero AB (STOCKHOLM: CBA.ST) who also started at Linköping University. However, their drones are meant to be used in defense, rescue, and coastguard while Intuitive Aerial primarily target the film industry. The market for commercial drones are expected to be huge and I think the biggest risk for Intuitive Aerial is that larger companies can come and dominate the market. AeroVironment (NASDAQ: AVAV), a US company that manufactures drones, entered in 2012 a collaboration with CybAero to develop and deploy a Tier II vertical takeoff and landing unmanned aircraft systems, something that many customers needed. The relationship gave AeroVironment exclusive rights to provide CybAero AB systems to US customers and government customers in NATO and other countries. They also agreed to buy up to $3 million convertible notes from CybAero to ensure the company's future growth. (AeroVironment is an interesting company and I will talk about them in future posts.) It would be good if Intuitive Aerial also could get a similar cooperation in the United States to secure their growth.
Despite that Intuitive Aerial is so small, they have reached out to customers working with BBC documentaries and Disney productions.
Despite that Intuitive Aerial is so small, they have reached out to customers working with BBC documentaries and Disney productions. CEO Robin Kahlbom says they have chosen to use their products as they offer better performance and reliability than other options. The company wants their drones to be simple to use and operate in any condition. Something that I believe they are and it's one of their strongest advantage against competitors. Today there is no big competitor to Intuitive Aerial, but it will probably occur high competition over the next few years. On the image below they demonstrates the difference between their product Aerigon and other options available:
Now, should you invest in Intuitive Aerial? The company wants to grow as fast as possible so they are burning money, the goal is to achieve positive cash flow in 2015. I think the main reason they want to grow quickly is that the rules surrounding the use of drones in the US is about to change. It has previously been very restrictive, but now, a few companies have been authorized and more are on the way this year. It's important to be aware that investments in smaller companies usually involves more risk. However, the risk may be high, but the growth potential is also high. I signed 5% in the rights issue in December for 10.75 (which also included one warrant to purchase one share for 13 before March 31, 2016) which turned out to be a great investment, the stock has already risen to 13.6. I will probably sell off a portion of my position to lower my risk in my portfolio. When your gonna invest in a smaller company it's especially important to check the company's board and management. I think Intuitive Aerial has a competent board of directors, for instance, does it include people from CybAero (the employees does also have a wide experience, see picture below). I still think the stock is worth buying, but I recommend that you go in and read their financials if you thinking about investing in Intuitive Aerial. More info: www.intuitiveaerial.com
Note: First North is a trading facility operated by the different exchanges within Nasdaq Nordic, companies at First North follow their rules and not the legal requirements for admission to trading on a regulated market.
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