SailPoint’s initial public offering (IPO) on Thursday underwhelmed those anticipating a resurgence of tech IPOs. The stock closed its first trading day below the initial price of $23. By Friday, the stock showed slight improvement, closing at over $24, though it did not achieve the significant impact that companies and venture capitalists might have hoped for.
ServiceTitan, a tech company that went public in December, offers a contrast with its highly successful IPO. Its share price surged from $71 to as high as $105 on the first day and remains trading around $100. Successive achievements like these could have signaled that the restricted IPO market was beginning to open up.
However, retail investors are acting with caution rather than exuberance. Nick Einhorn, Vice President of Research for Renaissance Capital, expressed his reluctance to draw definitive conclusions about the interest in tech or software IPOs based on SailPoint’s performance. He noted that, while the company has strong growth, it might not stand out sufficiently in the cybersecurity sector to merit a premium valuation.
Renaissance Capital is a research firm specializing in the IPO market and also provides an IPO exchange-traded fund (ETF). SailPoint’s IPO was unconventional as it was not a startup; the company was taken private by private equity firm Thoma Bravo in 2022 with a valuation of $6.9 billion, and the firm remains the majority owner.
This IPO represented a leveraged-buyout company rather than a traditional venture-backed startup, which often attracts investors with significant growth potential, as demonstrated by ServiceTitan.
On a positive note, SailPoint priced its 60 million initial shares at $23, above the previously announced range of $19 to $21. The company raised over $1.3 billion, which will be used for operations and to reduce approximately $1.5 billion in debt, as indicated in a regulatory filing. The company now has a market capitalization of about $13 billion, an increase from Thoma Bravo’s acquisition valuation.
CEO Mark McClain expressed satisfaction with the IPO, stating, “In no way did we consider this a disappointing IPO. We went from mid-point of $20 to a close of $25 on Day 2. In our minds, it’s a very successful IPO.” However, for those watching for signs of a renewed IPO market, especially employees of late-stage startups with stock options, the indicators remain unclear.
