NextVision founders cash in as stock surges 1,800%
The company’s executives have capitalized on the booming stock price, with shares jumping to a $2.1B valuation.
The large stream of IPOs that flooded the Tel Aviv Stock Exchange about four years ago brought with it many companies that disappointed investors. However, it also introduced companies to the exchange that certainly made investors smile from ear to ear—if they invested in them—and regret their decision if they didn’t.
One such company is NextVision, which produces technological solutions for photo and image stabilization for drones. The company went public in June 2021, at the height of the IPO wave, with a valuation of NIS 407 million ($111M). Since then, its stock has soared, driven by a strong tailwind from global geopolitical tensions. In fact, the company's market value has skyrocketed by 19 times (a return of about 1,800%), and it is currently trading at a market value of NIS 7.65 billion ($2.09B).
Over this period, the TA-125 index—the representative index of the local stock exchange—rose by "only" 46%. In other words, NextVision's stock has generated an excess return of approximately 38.5 times the market since the IPO. It is now competing for a spot in the flagship TA-35 index in the upcoming update in May.
"We did not initiate the sale of shares"
The surge in NextVision's stock has benefited the public, which holds most of the company's shares through institutional entities. But it has also benefited the pockets of NextVision's founders and senior executives: Chairman Chen Golan, CEO Michael Grosman, CTO Boris Kipnis, Director Yosef Sandler—who is the company’s largest shareholder—and Director Nachman Benchaya.
On Monday, NextVision reported that the group had sold 3% of the company's shares the day before, at a price of NIS 88.5 ($24.22) per share, which represents an 8% discount to the market price. The shares were purchased mainly by a foreign English bank, which bought 2.5% of the shares—becoming the first significant foreign investor in the company—and by Clal Insurance, which purchased 0.5% of the shares for approximately NIS 40 million ($10.94M), increasing its stake in the company from 6.5% to about 7%. Clal is now the most prominent institutional investor in NextVision.
CFO Alex Lavie signed a deal to sell options worth NIS 22 million ($6M), but the transaction is not yet completed. Once finalized, the total amount of shares sold by the company's senior executives will reach NIS 254 million ($69.5M).
One of the company’s executives stated regarding the sale that it was not initiated by the group of executives. "We did not intend to sell shares and did not initiate the sale," he explained. "Rather, we responded to a relevant request made to us. It was not easy to convince the NextVision investors to sell their shares because they believe in the company’s future and growth potential, and none of them need money immediately."
The executive continued, "All the divestitures made so far were intended to improve the positions of institutional investors in the company, or to strengthen the company’s positioning, as in the case of the foreign bank this week. It is important to us that strong institutional investors enter the company, and this was the right move for us. Now, we are focused on developing new products that will support NextVision's growth."
Indeed, this is not the first time NextVision executives, some of whom are founders, have sold shares. Since March 2022, when they first started selling shares, they have sold a total of NIS 550 million ($150M) worth of shares. This week’s sale was the largest to date. After these sales, their combined shareholding in the company stands at 22.2%, a stake worth approximately NIS 1.7 billion. This represents an increase of approximately NIS 1.54 billion since the IPO.
Together with a salary cost of approximately NIS 45 million ($12.31M) for the four senior executives (Chairman Golan, CEO Grosman, and VPs Kipnis and Lavie), this group has accumulated profits of about NIS 2.1 billion since the IPO in mid-2021, with most of the amount on paper as a result of the increase in the value of the shares they hold. This amount includes the expected sale of CFO Lavie’s shares.
Looking for a Significant Acquisition
The entry of a foreign investor into NextVision is no coincidence; it aligns with the company's future plans. Last week, after the company published its reports for 2024, which showed a sharp increase in all key parameters, Chairman Golan was asked about the company’s potential IPO on Nasdaq—an option the company has previously discussed. Golan clarified that, at this stage, it is still just an idea and has not yet reached practical levels. In a conversation with Calcalist, he added, "The IPO market has not yet opened, and our value is too low to attract significant investments on Nasdaq." According to Golan, Wall Street investors typically don’t show significant interest in companies with a market value of around $2 billion, similar to NextVision's current market value.
Therefore, he said, "We are mainly focused on presenting the company to foreign investors who are interested in investing outside the U.S. The company's next move will be an acquisition deal that will increase our value. We are looking for a company in a field that we can acquire." An acquisition in NextVision's area of expertise could provide a major boost to both its performance and value, ultimately paving the way for a Nasdaq IPO. The entry of a foreign investor into the company is a crucial step along this path.
Net Profit Jumps 11.6 Times
The surge in NextVision’s stock and the interest shown by investors are due to the significant growth in its financial results, which have been driven by increased demand for military products and technologies amid global conflicts—from the Russia-Ukraine war to Israel's war on Hamas.
In 2021, the first year it was public, NextVision’s revenues amounted to $15 million and net profit stood at $5.7 million. By the end of 2024, the company reported revenues of $115 million and net profit of $66.4 million, with an order backlog of $95 million at the end of the year.
