Twitter has been dominating conversation in technology companies recently and it seems that this hype is not unwarranted. Even excluding the Facebook initial public offering (IPO), there has been a remarkable upward trend in technology and software IPOs. Five years ago Emergence Capital Partners decided to invest $4 million in Veeva Systems (VEEV). The relatively young company develops cloud software used by pharmaceutical companies to manage much of its operations. As the company was set to go public on Oct. 16, it was valued at well over $3 billion which gave Emergence a stake worth over $1 billion. The stock opened at $20 and closed on the first day at over $37, an increase of 85 percent. Today the stock is hovering around $38. At the end of its opening day the company walked away with about $217 million from the IPO. Veeva has more than 170 clients in the pharmaceutical and life sciences sectors including Bayer and Novartis.
Workay (WDAY), a similar cloud software company, also went public with a strong performance. The stock is currently up about 63 percent and is hovering at a price of $75 a share with an opening price of $48.
Technology companies FireEye Inc. (FEYE) and Rocket Fuel Inc. (FUEL) also went public this year, and started the trend of growth for tech and Internet IPOs. FireEye makes software that protects computer systems from hacks, and on its opening day it jumped about 90 percent to $38 a share, making about $300 million from the IPO. Rocket Fuel is a digital advertising company that climbed 91 percent on its opening day to a price of $55 a share, earning the company about $116 million from its IPO.
Tech IPOs are the source of a lot of excitement right now. One reason might be that the average one-month share price gain for 2013 technology company IPOs is about 39 percent. Although this trend might be the source of optimism for many, analysts are commenting that these companies are not pricing their IPOs correctly. If the price is set too high it could flop. If it is set too low then it may skyrocket, but it can also indicate that the company was undervalued. Even with this criticism, investors have a lot of confidence in technology companies right now and that could bode well for Twitter’s upcoming IPO.
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