Rosetta Stone Inc
Rosetta Stone, which provides language instruction products, opened trading at $25, on the morning after it priced its IPO at $18, exceeding the estimate range.
In morning trade, Rosetta Stone shares were changing hands at $25.59 on the New York Stock Exchange.
Rosetta Stone is on pace for the strongest first-day performance since fertilizer maker Intrepid Potash Inc
Arlington, Va.-based Rosetta Stone sold 6.25 million shares, netting proceeds of $112.5 million in its initial public offering on Wednesday.
The strong performance raises the question as to whether the company could have priced its IPO more aggressively, a notion Rosetta Chief Executive Tom Adams dismissed Thursday.
We are a long-term oriented group and we deliberated ... it's hard to pick the right price, but we're comfortable with it, Adams told Reuters in an interview.
Despite the small size of the stock float and the high demand for the stock, the company has no plans for now for a follow-on, or for acquisitions, Adams said.
The IPO will net Rosetta Stone about $48 million (half the deal's total proceeds are going to existing shareholders), but the greater benefit of the deal will be higher brand recognition, Adams said.
Large institutions, companies and government agencies will have more trust in a publicly listed company and that will help business, Adams said. It elevates our profile. We have a dominant brand and this will strengthen it.
Building recognition is central to its efforts to strengthen international sales, which account for only 5 percent of business, but which analysts say are crucial to maintaining its growth.
In 2008, Rosetta Stone's revenues rose 52 percent to $209.4 million from 2007, with net income of $13.9 million, according to a regulatory filing.
Rosetta Stone's successful pricing came a day after college operator Bridgepoint Education Inc
But Bridgepoint, a growing, profitable company, faces stiffer competition than Rosetta Stone, which is the first stand-alone language training company, an analyst said..
People are starved for companies that have good internal growth, and positive cash flow, said Francis Gaskins, president of research firm IPO Desktop. But Rosetta benefited from a lack of publicly held competitors.
Rosetta Stone, which provides instruction services in 31 languages to individuals, companies and schools primarily through CD-ROMs, has attracted attention through an advertising campaign that has featured U.S. Olympic swimming gold medal swimmer Michael Phelps.
The IPO's underwriters were led by Morgan Stanley
Rosetta Stone's IPO is the fourth so far in 2009, and the third in April, making it the busiest month for new stock flotations since July 2008.
There are currently no other IPOs on the calendar.
(Reporting by Phil Wahba, editing by Matthew Lewis and Gunna Dickson)