Skift Take
They did it. Despite the cratering of the stock market, Mondee went public on Nasdaq. Sure, most investors vetoed the blank check merger. But still, a win is a win — for now.
Since its start in 2011, Mondee has aimed to go public. Like a snowball rolling down a mountain, the travel tech company based in California grew bigger through a series of acquisitions. The travel technology firm on Tuesday finally debuted on the Nasdaq stock market with a market capitalization of approximately $740 million.
“The capital raised through this transaction along with our new access to the public markets will allow Mondee to capitalize on the massive organic and inorganic growth opportunities in the travel industry,” said founder and CEO Prasad Gundumogula.
The triumph was muted, though. Mondee will pick up about $77 million in funds from deal — 73 percent less than the $291.5 million it had expected from the merger with blank check company ITHAX. Since the merger plan was revealed last year, the market for special purpose acquisition companies, or SPACs, soured along with the broader equities market.
Last week, investors in ITHAX sought refunds on about 97 percent of the shares the blank check company sold in January 2021. That showed a resounding lack of confidence in the idea that merging with Mondee would be a smart, the companies said in financial filings last week. Investors preferred to get their roughly $10 a share back than bet on Mondee’s debut
Should they have had faith instead? Mondee debuted on Tuesday at about $11 a share, though within an hour it was down to $10 as the broader markets remained choppy.
Yet several other recent travel-related blank check mergers have soured post-debut. Sonder, a hospitality brand, hit $10.80 a share shortly after its market in February but currently trades at $1.
Nevertheless, the booming post-pandemic rebound in travel attracted some investors including Morgan Stanley Investment Management and private equity firm Arc Pe to contribute $50 million in a private investment in public equity, or PIPE, in recent months.
A Financial Times report said an additional $20 million in PIPE investment came intriguingly from Travelport’s financial sponsors, Elliott Management and Siris Capital. That raised speculation that Travelport might consider Mondee a possible merger target.
Like other travel companies recently brought to market by SPACs, Mondee has been unprofitable.
It suffered a net loss in the first quarter of $7 million on net revenue of $38 million. Last year, it lost $38.9 million while generating $93 million in revenue. The company’s chief operating officer said the company was “profitable,” without defining that, during an interview published June 16, as Skift previously reported.
Mondee mainly offers cloud-based tools to so-called “gig travel agents,” a category of independent workers it claims is growing. But the 1,000-employee company is also a Swiss Army knife of travel services, with direct-to-consumer subscription travel sales, rewards-based business travel programs, wholesaling services, and other offerings. For more analysis of the company, see Skift’s recent article: The Problems in Mondee’s Plan to Go Public.
“We are well-positioned to consolidate our EBITDA [earnings before interest, taxes, depreciation, and amortization] profitability and accelerate our growth strategy as a result of this business combination,” said CEO Gundumogula.
