Splunk has become the unlikely winner of the best IPO debut award this year.
The unprofitable business-technology start-up that helps companies organize all the big data it collects saw shares rocket 109% on the Nasdaq, sending its market value above $3 billion on Thursday — after placing its IPO price at $17.
But that doesn’t mean that no one else felt a substantial first day pop this year. Mobile-ad network Millenial Media saw a 92% surge after its offering last month, showing investors that now might jut be the time to get your tech on.
These IPO openers matched the May 2011 debut of LinkedIn.
Demand for Splunk was high, with lead underwriters Morgan Stanley explaining that it was the most oversubscribed IPO the investment bank had ever led, experiencing 36 times more orders than shares offered.
That early demand drove the company to raise its IPO price twice, eventually landing at $17 from an initial range of $8 to $10.
Splunk, which started in 2004, has been growing rapidly as the interest in big data has exploded. But that doesn’t mean that this is a profitable company yet. The company widened its financial losses to $11 million for the year that ended in January, from $3.8 million a year earlier. The company revenue, however, is rising — 83% to $121 million for the last fiscal year.
At the start of the year, Splunk had more than 3,700 customers, including Bank of America Corp.,Comcast Corp., and Harvard University.
What this mean for the next few tech IPOs
So this boom in IPOs could all spell great news for Facebook as we start the countdown clock to its IPO in four weeks.
And with Facebook, undoubtably on the road to outpacing the Splunk oversubscription in its quest to raise around $10 billion from the stock sale, this will be an exciting time for tech trading.
With an expected valuation near $104 billion, Facebook could be trading at nearly the same level it was trading at on the secondary market — about $40 a share — and would make it the largest IPO of any Internet technology company ever.
The Facebook IPO has been long awaited since the hugely successful offering from online professional networking site Linkedln last year, which excited many companies about possible IPOs such as Yelp, Jive and Angie’s List — and now Millennial and Splunk.
Two other tech companies, Proofpoint Inc. and Infoblox Inc., have scheduled their IPOs for this week so we will just have to see if this wave is going to help all pre-Facebook IPOs since the market hasn’t been as kind on a couple of post-IPO giants like Zynga and Apple.
Apple shares returned to a downward trend with a decline of 3.4% that pushed shares back to under $600 at the close on Thursday.
San Francisco’s Zynga also continues to feel some pressure. Shares have fallen below its IPO price of $10 a share with its fifth consecutive session of losses. On Thursday, shares fell 4.6% to close at $9.58. Zynga’s shares have now fallen a staggering 21% in a single week.
