Tech IPOs surge in early months of 2017

The number of technology companies hitting the market with initial public offerings (IPOs) has surged in the first few months of 2017, according to TechCrunch. At this time last year, only one tech company had gone public; in contrast, nine tech IPOs have happened so far this year.

“That comparison becomes starker when you compare SecureWorks, 2016’s first IPO, to Snap, which went public in 2017,” TechCrunch noted. “SecureWorks priced under range, and it has since fallen nearly 38 percent from its IPO price. Snap, in contrast, priced above range and then saw its share price quickly ascend.”

A widely varied marketplace

The most discussed, highest-earning IPO in the tech world so far this year was the debut of the Snapchat app’s parent company. Snap earned a higher market valuation than its peers by more than $20 billion. TechCrunch put the value of all nine tech IPOs at $37.5 billion, meaning Snap’s value is more than two-thirds of all 2017’s tech companies’ public offerings, making up 68.8 percent of that figure. The second-highest valuation went to Mulesoft, with $2.9 billion (7.8 percent of the total figure).

Hadoop-based data management software company Cloudera notably raised $225 million on the first day of its IPO late last month, according to Fortune. The company had a market valuation of about $1.9 billion, down from the $4.1 billion it was once valued at in the private market. This year’s other six tech IPOs included Alteryx, Carvana, Elevate Credit, Netshoes, Okta and Yext. Two-thirds of this year’s tech IPOs are worth more than $1 billion, which is notable because none of the companies have yet reached profitability, as TechCrunch reported.

Rapid growth, but for how long?

Last year saw the slowest IPO activity since 2009. Nutanix’s September market debut was the year’s largest IPO, with the company raising about $270 million. Shares hit almost 150 percent of the original listing price on the first day of trading, The Mercury News said.

This year’s early momentum may not continue, however, as The Street reported. Experts have been predicting that this year will have a much smaller overall tech IPO class than 2016.

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May 3, 2017 at 06:10AM