What Is Janover?
Boca Raton, Florida-based Janover (JNRV) was founded to develop an online B2B platform to connect commercial mortgage borrowers with potential lenders.
Management is headed by founder, president, Chairman and CEO Blake Janover, who has been with the firm since inception and was previously a consultant on various real estate projects.
Potential lender types include small banks, Fannie Mae and Freddie Mac, debt funds, SBA Lenders and others.
Management says the company has ‘processed’ over $100 billion in transactions to-date.
The firm earns a transaction fee of ‘approximately 1% of the loan amount generally earned at closing.’
Janover’s Market & Competition
According to a 2022 market research report by Allied Market Research, the global commercial lending market was an estimated $8.8 trillion in 2020 and is forecast to reach $29.4 trillion by 2030.
This represents a forecast CAGR of 13.1% from 2021 to 2030.
The main drivers for this expected growth are a rise in secured lending practices and increasing availability of funding for commercial operations.
Also, there has been an increase in non-bank funding sources and these sources are expected to drive a higher growth rate through 2030.
Major competitive or other industry participants include:
Marcus & Millichap
Meridian Capital Group
Eastern Union Funding
Janover’s IPO Date & Details
The initial public offering date, or IPO, for Janover has not yet been announced by the company or its IPO underwriter.
(Warning: Compared to stocks with more history, IPOs typically have less information for investors to review and analyze. For this reason, investors should use caution when thinking about investing in an IPO, or immediately post-IPO. Also, investors should keep in mind that many IPOs are heavily marketed, past company performance is not a guarantee of future results and potential risks may be understated.)
Janover intends to raise $16.4 million in gross proceeds from an IPO of its common stock, with the company offering 1.7 million shares and selling shareholders offering 1.04 million shares at a proposed midpoint price of $6.00.
No existing shareholders have indicated an interest to purchase shares at the IPO price.
Assuming a successful IPO, the company’s enterprise value at IPO would approximate $47.5 million, excluding the effects of underwriter over-allotment options.
The float to outstanding shares ratio (excluding underwriter over-allotments) will be approximately 28.3%. A figure under 10% is generally considered a ‘low float’ stock which can be subject to significant price volatility.
Management says it will use the net proceeds from the IPO as follows:
Management’s presentation of the company roadshow is not available.
Regarding outstanding legal proceedings, management believes that the firm may be subject to pending legal proceedings but that there would be no material adverse effect on its financial condition or operations.
The sole listed bookrunner of the IPO is EF Hutton.
How To Invest In The Company’s Stock: 7 Steps
Investors can buy shares of the stock in the same way they may buy stocks of other publicly traded companies, or as part of the pre-IPO allocation.
Note: This report is not a recommendation to purchase stock or any other security. For investors who are interested in pursuing a potential investment after the IPO is complete, the following steps for buying stocks will be helpful.
Step 1: Understand The Company’s Financial History
Although there is not much public financial information available about the company, investors can look at the company’s financial history on their form S-1 or F-1 SEC filing (Source).
Step 2: Assess The Company’s Financial Reports
The primary financial statements available for publicly-traded companies include the income statement, balance sheet, and statement of cash flows. These financial statements can help investors learn about a company’s cash capitalization structure, cash flow trends and financial position.
My summary of the firm’s recent financial results is below:
The company’s financials have produced growing topline revenue, increasing operating losses and a swing to cash used in operations.
Free cash flow for the twelve months ended June 30, 2022, was negative ($358,794).
Sales and Marketing expenses as a percentage of total revenue have risen considerably as revenue has increased; its Sales and Marketing efficiency multiple dropped to 0.3x in the most recent reporting period.
The firm currently plans to pay no dividends and intends to retain any future earnings to reinvest back into its growth initiatives.
Step 3: Evaluate The Company’s Potential Compared To Your Investment Horizon
When investors evaluate potential stocks to buy, it’s important to consider their time horizon and risk tolerance before buying shares. For example, a swing-trader may be interested in short-term growth potential, whereas a long-term investor may prioritize strong financials ahead of short-term price movements.
Step 4: Select A Brokerage
Investors who do not already have a trading account will begin with the selection of a brokerage firm. The account types commonly used for trading stocks include a standard brokerage account or a retirement account like an IRA.
Investors who prefer advice for a fee can open a trading account with a full-service broker or an independent investment advisor and those who want to manage their portfolio for a reduced cost may choose a discount brokerage company.
Step 5: Choose An Investment Size And Strategy
Investors who have decided to buy shares of company stock should consider how many shares to purchase and what investment strategy to adopt for their new position. The investment strategy will guide an investors’ holding period and exit strategy.
Many investors choose to buy and hold stocks for lengthy periods. Examples of basic investing strategies include swing trading, short-term trading or investing over a long-term holding period.
For investors wishing to gain a pre-IPO allocation of shares at the IPO price, they would ‘indicate interest’ with their broker in advance of the IPO. Indicating an interest is not a guarantee that the investor will receive an allocation of pre-IPO shares.
Step 6: Choose An Order Type
Investors have many choices for placing orders to purchase stocks, including market orders, limit orders and stop orders.
Market order: This is the most common type of order made by retail traders. A market order executes a trade immediately at the best available transaction price.
Limit order: When an investor places a buy limit order, they specify a maximum price to be paid for the shares.
Stop order: A buy-stop order is an order to buy at a specified price, known as the stop price, which will be higher than the current market price. In the case of buy-stop, the stop price will be lower than the current market price.
Step 7: Submit The Trade
After investors have funded their account with cash, they may decide an investment size and order type, then submit the trade to place an order. If the trade is a market order, it will be filled immediately at the best available market price.
However, if investors submit a limit order or stop order, the investor may have to wait until the stock reaches their target price or stop-loss price for the trade to be completed.
The Bottom Line
JNRV is seeking public capital market investment for its general corporation purposes.
The market opportunity for the commercial lending market is large and expected to grow at an above-average rate of growth in the coming years, so the firm enjoys positive industry dynamics in its favor.
EF Hutton is the lead underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (68.1%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.
The primary risk to the company’s outlook is pioneering new workflows in an industry that has proven itself to be slow to change.
As for valuation, management is asking investors to pay an EV/Revenue multiple of 21.4x on revenue growth that is decelerating already and is from a tiny base.
Although the stock’s low nominal price may attract day traders seeking volatility opportunities, given the firm’s high valuation assumptions, tiny size, increasing operating losses and long odds for success in the near term, my outlook on Janover’s IPO is on Hold.