Nutanix shares soar on 1st day of trading
Nutanix’s gain beats that of San Francisco cloud communications provider Twilio, which jumped 92 percent on its first trading day in June.
Nutanix shares more than doubled in their first day of trading Friday, the strongest first-day gain for a technology stock offering this year.
The San Jose company, which provides cloud storage for businesses, waited for nine months for its initial public offering as choppy markets kept many other private companies away. Nutanix was one of the few venture capital-backed startups brave enough to file plans for its offering last year.
Shares jumped 66 percent at the open of trading, and finished the day up 131 percent.
This year, 17 tech companies have gone public in the United States, the lowest number since 11 deals in 2009, according to data from Dealogic. Before Nutanix, the 2016 new listings were trading an average of 72 percent above their offer prices, compared with an average of 35 percent across all sectors for domestic initial public offerings.
Nutanix’s gain beats that of San Francisco cloud communications provider Twilio, which jumped 92 percent on its first trading day in June.
The success suggests that investors are still eager for hot tech offerings after all. After much anticipation, Nutanix priced its $238 million offering on Thursday evening, with a valuation of $2.18 billion — slightly higher than the one it received in the private markets 2½ years ago.
Although Nutanix did not receive
the large premium that its latest investors would have liked, the company, which was founded seven years ago, avoided the fate of pricing shares at a steep discount to their most recent private funding round. Nutanix’s shares are trading on the Nasdaq Stock Market under the ticker symbol NTNX.
Nutanix was among the unicorn technology companies — those with valuations of $1 billion or more — on every prospective initial public offering list. So far, it is one of only a handful of venture capital-backed companies with valuations greater than $1 billion to go public this year.
With nearly 4,000 customers as diverse as Nordstrom, Nintendo and the Department of Defense, Nutanix garnered widespread attention for its innovative technology that combined servers, storage and related software into one platform.
Prominent venture capitalists such as Khosla Ventures and Lightspeed Venture Partners, as well as the heavyweight mutual fund Fidelity Investments, have invested more than $300 million in the company.
After it postponed its initial offering earlier this year, it issued $75 million worth of debt to Goldman Sachs for additional cash.
Nutanix was able to increase revenue 84 percent during the year through July 31, generating about $445 million. Net losses, however, grew by about 34 percent as the company spent millions of dollars more on sales and marketing and research expenses.
Another large risk emerged after Dell and EMC merged in September. Dell accounted for a “meaningful portion” of Nutanix’s total sales over the last few quarters, the company said in its IPO filing. With the acquisition, Dell now controls VMware, which competes with Nutanix.
The company has warned that if Dell chooses VMware’s products over its own, it could harm Nutanix’s operating results and cause its stock price to fall.
Late Thursday, Nutanix offered 14.9 million shares, at $16 each. Previously, the company marketed 14 million shares at a range of $11 to $13 a share. It increased the range to $13 to $15 on Thursday after the underwriters felt more confident about investor demand.
The company has a dual-class share structure, meaning that holders of Class B stock will have 99 percent of the voting power. Those investors who bought Class A shares through the offering will have only 1 percent.