Shares in RealD Inc , whose 3D technology was used to help make the movie Avatar, opened more than 22 percent above their initial public offering price on Friday and shares of business software maker Qlik Technologies Inc opened 20 percent higher.
Shares in California-based RealD opened at $19.55, 22.2 percent above their IPO price, and rose to $20 in late morning trading on the New York Stock Exchange.
Qlik, whose customers include BP Plc , Campbell Soup Co , Kraft Foods Inc and Qualcomm Inc , shares opened at $12 and were at $13.05 in early trading on the Nasdaq.
Some analysts warn that costs and competition still make these companies speculative investments, prone to volatility.
This (RealD) is interesting and sexy technology. 3D is one of the hottest things right now in consumer entertainment and for that reason you get a lot of investor interest. Maybe this is the next big thing, but a more staid perspective forces a broader view, Morningstar IPO analyst Michael Gaiden said in a telephone interview.
Operating losses have been growing. That leads us to have substantial concerns about the company's ability to regularly generate a profit, Gaiden said. Gaiden's Morningstar team rates RealD low interest.
RealD collects a license fee from theater owners and is dependent on Hollywood continuing to produce 3D films. The company's net loss grew to $39.75 million in the year ended March 26 from $16.36 million a year earlier. Net revenue spiked 278 percent to $149.85 million in the same period.
RealD is the No. 1 installer of 3D technology in theaters, which must convert their screens to 3D to show the movies.
So far, 5,300 U.S. screens have been converted to digital. Converting the remaining 35,000 U.S. screens could cost upwards of $2.6 billion, according to the National Association of Theater Owners.
Globally, about 10,000 movie screens are 3D enabled and more than half carry RealD technology.
Besides theaters, RealD's technology has been used in televisions and laptops, the Mars Rover and military jets, as well as in robotic medical procedures.
RealD raised 33 percent more than it expected in Thursday's IPO. The company sold 12.5 million shares for $16 each, raising about $200 million. It had planned to sell 10.75 million shares for $13 to $15 each.
Qlik, which also garnered strong investor interest in its IPO, raised about $112 million, 11 percent more than expected. It sold 11.2 million shares for $10 each on Thursday, ahead of the $8.50 to $9.50 share price it had projected.
Morningstar's Gaiden said Qlik is also in a fast growing market, but will have to watch out for competition.
Microsoft Corp's Excel is a competitor and both SAP AG and Oracle Corp have announced bolt-on analytic software, said Gaiden whose team also rates Qlik low interest.
Qlik's revenue rose 65.8 percent to $43.77 million in the three months ended March 31. It narrowed its net loss to $119,000 from $4.3 million.
The company, whose shareholders include Accel Europe and Jerusalem Venture Partners, said it would use proceeds from the offering to repay a loan and for working capital and general purposes.
Underwriters on Qlik's IPO were led by Morgan Stanley, Citi and JPMorgan. JPMorgan and Piper Jaffray led RealD's underwriters.
Qlik shares are trading on the Nasdaq under the symbol QLIK. RealD is trading on the New York Stock Exchange under the symbol RLD.
(Reporting by Clare Baldwin, editing by Gerald E. McCormick, Leslie Gevirtz)