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MindBody stock drops after public offering

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Hoping to follow in the footsteps of successful wellness- and fitness-based tech companies like Fitbit, SLO-based MindBody Inc. filed to become a publicly traded company in May.

But despite selling more than 7 million shares and raising $101 million before going public on the Nasdaq exchange June 19, the stock’s initial public offering (IPO) price dropped. By the end of the first trading day, the stock—initially priced at $16.22 per share—dropped roughly 17 percent by the end of the trading day, according to data from the investment analysis website zacks.com.

MindBody spokesperson Georgia Suter said the company couldn’t comment on the matter due to an SEC imposed, “post-IPO quiet period.”

The company, which provides web scheduling and marketing software to health- and fitness-based businesses, has roughly 42,000 subscribers and nearly 24 million consumers, according to MindBody’s SEC registration documents. The documents showed that the company saw revenue growth in recent years; from $32 million in 2012 to $70 million in 2014.

However, the company also admitted to a “history of losses” in those same documents. The documents showed MindBody’s net losses included $5.52 million 2012, $16.25 million in 2013, and $24.61 million for 2014. Net loss for the first three months of 2015 were a little more than $7 million.

“We have a history of losses, and our revenue growth rate may not sustain the levels experienced in recent years,” the document stated. “As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability.”

Despite those losses, the company continued to grow both abroad and here in SLO. In April, MindBody completed construction of a 64,000-square-foot expansion project at its SLO headquarters. In a June 9 post on the tech blog PandoDaily, writer Kevin Kelleher noted that such expansion, while allowing MindBody to hold onto and strengthen its market position, comes at a price.

“All that expansion and marketing requires cash—and MindBody has been burning through it,” Kelleher wrote.

While the postmortems on the company’s IPO will continue, the value stock appeared to make small gains in the days since its debut on the Nasdaq. The stock rebounded from a low of $11.56 on Friday to $13.90 by end of the trading day June 23.

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