Shares of Nutanix Inc NTNX started trading Friday, with an opening price of $16, above the originally anticipated range of $13 to $15. The stock gained more than 110 percent over the day to $33.75.
How could this IPO impact other tech IPOs going forward?
Analysts at EquityZen explained that, while there was a freeze in the IPO market after Twilio Inc TWLO’s public offering earlier this year, this company “wasn't the behemoth… But Nutanix is certainly more of a bellwether for technology companies.”
“Nutanix has some of the top underwriters behind them. They know how to time the markets. If they say go, it's go time,” the experts continued. Keeping in mind Pure Storage Inc PSTG’s poor performance since its IPO last year, “Nutanix's decision to step forward shows confidence in its own business and in public markets.”
“We're going to see more companies follow on the back of this float. On the heels of Nutanix's step forward into the public spotlight, rival Tintri filed for an IPO,” they added. “It is a good time to go public if the company is strong. Weaker companies will not be received well given the way 2016 has shaped up.”
How does Nutanix compare to typical tech IPOs?
Most tech companies are unprofitable upon IPO, but are required to generate stable and solid revenue. Nutanix went from generating $6 million to $445 million trailing revenue in four years.
What's good about Nutanix?
This is a high growth firm that trades at a less than 5x revenue multiple. It's a natural acquisition target in its space.
Since they're a full solution to server/compute optimization, they can also be a platform for other companies.
Image Source: EquityZen
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