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U.S. debt ceiling debate could impact Impinj IPO

A report from Credit Suisse this morning and carried by CNNMoney states that if the U.S. fails to raise the debt ceiling and defaults on its loans next week, the result could be a stock market tumble of one-third or more, and a contraction in the economy of five percent.

That’s bad news for everybody, but especially for companies like Impinj that are on the doorstep of going public. If the infighting over the U.S. debt continues, it’s entirely possible that capital for IPOs could dry up if the debt ceiling debate is not resolved quickly.

So you can’t blame the folks at Impinj for being a bit anxious as they prepare for the EPC solution provider’s IPO. Until recently, technology, social media and Internet IPOs were buzzing, with Internet high-flyers LinkedIn and Zillow seeing big gains on their opening day of trading. What’s to think that a hot RFID play with a great growth story wouldn’t have the same kind of debut?

If successful, Impinj would represent the first RFID pure play in the public markets. “Specifically, it would be the first EPC pure play, so the message clearly would be that the EPC market is coming on board quickly,” says one industry insider. A successful IPO “would definitely show that the core component of the industry – the tag and the reader — is a growing market and that there is a growing demand for it.”

But the stalemate in Washington, and the possibility of a U.S. default on Monday, could impact all IPOs going forward. As Washington continues to try and iron out a solution, the stock market endured losses this week until a modest turnaround today. Yesterday, ADS Tactical, Inc. (ADS) announced that it has terminated its IPO due to adverse market conditions. The company provides logistical services, mainly to the federal government.

“It’s a very dangerous situation right now, and anything remotely connected to the government, and the possibility of a temporary or perhaps permanent reduction in revenues, is turning people off,” says Scott Sweet, Senior Managing Partner at IPO Boutique. “That will be the case until there is a plan that seems workable, but at the moment it doesn’t seem as they are getting anywhere.”

Impinj might luck out in that its IPO is likely still six to eight weeks away, during which time the debt ceiling debate could be put behind us. Impinj filed its IPO in April, and its S1 was filed on the same day as Internet real estate firm Zillow, which went public this week. So that means Impinj could be getting close.

A successful Impinj IPO would be a stellar sign for the industry. Impinj is a relatively small company with sales of just under $32 million in 2010. However, the firm has a strong IP position and a very strong market position, and a successful IPO would enable Impinj to further advance the overall RFID marketplace through increased funds for R&D and marketing to develop new applications. Impinj has been very supportive of industry-wide application development, and a successful IPO would only enhance that.

 

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