Analyst: "The market has changed. IPOs are now more dangerous, with more than just the Pure IPO breaking deal price."
, a rising star in solid-state NAND flash storage, doffed its cap at the plate for the first time on the New York Stock Exchange Oct. 7 -- then struck out in its first at-bat in the majors.
The company debuted at $17 per share but ended its first day at $16.01, down 5.8 percent. But, again, it was only the first day as a publicly traded stock for the Mountain View, Calif.-based company, which became only the 20th tech company to go public this year, according to Dealogic
. This compares with 62 companies to go public in all of 2014 and 48 in 2013.
Pure Storage had filed for the initial public stock offering back on Aug. 12
with the Securities and Exchange Commission. The company raised $425 million in selling 25 million shares, giving it a market value of $3.1 billion.
"It likely says more about the market than it does about Pure Storage specifically," Joe Milano, chief investment officer of Greenhouse Funds LP, told The Wall Street Journal
. "The market has changed. IPOs are now more dangerous, with more than just the [Pure IPO] breaking deal price."
The Oct. 7 IPO had been expected for at least a year. The six year-old company had been valued by private investors at a reported $3 billion last year, and startups valued at levels like that don't stay startups for long. They either get bigger or they get acquired. Pure Storage has elected to get bigger with an IPO estimated to bring in $300 million from many new investors.
The company is listed under the ticker symbol PSTG; Morgan Stanley led the IPO.
Pioneer in Flash Storage
Pure Storage was one of the first companies to purpose-build its storage on NAND flash media. Solid-state storage requires very different software and connectors than does spinning-disk, hard drive-based media, and co-founders and co-CTOs John Colgrove and Michael Cornwell knew that from Day 1.
Pure Storage is all about speedy data movement. Speedy storage processing not only reduces complexity and accelerates IT infrastructure, but it also improves business continuity and productivity. In a data-driven, mobile-first world, fast storage often can be the difference between higher yield and lower margins, customer engagement and abandonment, productivity and downtime.
During its short time in business, Pure Storage has banked $530.9 million in eight rounds of funding from a total of 13 investors, according to CrunchBase. Its most recent round a year ago resulted in $60 million.
The company, in fact, has burned through a lot of cash—mostly due to sales and marketing investments. Despite its high valuation, Pure Storage's S-1 affidavit showed that the company is losing money at a rather alarming rate. In 2014, it reported a net loss of $183.2 million, while it banked $174.5 million in revenue.
Nonetheless, it retains high regard in the industry.
On a Growth Tear
Investors in Pure Storage undoubtedly will consider the upside of Pure's growth. Its sales in 2014 were up by a multiple of four from 2013. In Q1 2015, it had sales totaling $64 million, which translates to more than $250 million in sales this calendar/fiscal year.
Pure Storage makes FlashStack CI, an all-flash storage system offering composed of hardware, reference architectures, deployment and sizing guidelines, and single-call support. The reference architectures, which can mix and match other brands of storage components, are strictly for virtual server and virtual desktop deployments.