AGFY Stock Climbs After Going Public: Is the AGFY IPO a Good Buy?

On Jan. 28, Agrify, a cannabis company, had a successful debut on the stock market. On its first day of trading on the Nasdaq, Agrify stock surged 27.4 percent. The company plans to raise $54 million in the offering. Is AGFY IPO stock a good buy for investors in 2021? What can investors expect after the IPO?

Agrify offers hardware and software grow solutions to controlled environment agriculture companies in the U.S. The company’s top line is growing rapidly in a promising industry. Its investors include Li Chen, Dennis Liotta, Win-Light Global, and Jesan Capital.

Agrify is offering 5.4 million shares in the IPO at $10 per share. The company has upsized its offering to match investors' growing appetite for cannabis companies. Previously, AGFY was offering 5 million shares for $8–$10. The IPO is set to close on Feb. 1, subject to customary closing conditions. The proceeds from the offering will be used for sales and marketing, research and development, and working capital and general corporate purposes.

On Jan. 28, Agrify stock started trading on the Nasdaq under the ticker symbol "AGFY." The stock opened at $13, up 30 percent from its IPO price. Agrify stock closed 27.4 percent higher that day, at $12.74. Maxim Group LLC and Roth Capital Partners, the underwriters for the deal, have the option to purchase an additional 810,000 shares.

To buy Agrify stock, you'll need a stock trading account. You can open a brokerage account with Robinhood, E-Trade, or Vanguard. Before you can start investing, you'll have to transfer funds to your account. You can then search for Agrify stock by its ticker symbol or the company name, and buy its stock.

Agrify isn't profitable yet, and doesn't anticipate achieving profitability in 2021. The cannabis company reported a net loss of $8.6 million in the first nine months of 2020, and a net loss of $1.2 million in the first nine months of 2019. Agrify’s revenue in the first nine months of 2020 rose by 218.9 percent year-over-year to $7.7 million.

The Agrify stock IPO looks like a good play on the promising controlled environment agriculture market. The market is likely to grow significantly, driven by a surge in the popularity of organic food. The global vertical farming market size, valued at an estimated $2.23 billion in 2018, is set to reach $12.77 billion in value by 2026, according to Allied Market Research. 

As of Dec. 31, 2020, Agrify had an order backlog of $59.3 million. In 2021, Agrify expects to generate $40 million in revenue. The company’s next-12-month price-to-sales multiple stands at 3.9x, which looks attractive compared with other cannabis companies' multiples. Based on the rising sales for cannabis companies, AGFY could be a good buy.