Pure Storage, the enterprise storage company, went public on the New York Stock Exchange Wednesday. After pricing at $17, shares traded down in its debut, closing the day at $16.01.
CEO Scott Dietzen spoke to TechCrunch about why the company executed an IPO during what has been a lackluster year for tech stocks. “We were ready to be a public company,” said Dietzen. “We don’t worry about market conditions. Great companies can come out when it’s right for them.”
A competitive landscape, which includes HP, EMC and Dell, Dietzen is betting on continued momentum as well as growth of the overall industry. Pure Storage is performing “very well in a crazy large market,” he said.
Dietzen added that the company is “two years ahead of the rest of the market,” which he estimates is $24 billion in size. “That whole market is going to go flash and we want to play for the number one share in it.”
The company’s IPO performance, slipping in its first day’s trading, isn’t big news. Other recent IPOs that have seen sharp declines in value following their flotation have performed more strongly. For example, Box, a tech company that went public this year, surged on its initial day as a public company. In the ensuing months, its shares have sagged.
For industry watchers, any current public technology offering is a bellwether. The IPO cadence for technology firms has been infamously slow in 2015, causing concern among those both seeking liquidity for their investments, and executives worried about where their private valuation might square with the public markets.
To underscore that point, Dropbox, a company that could formerly do no wrong, recently endured an embarrassing haircut.
Pure Storage’s offering went off mid-range. It fell a modest 5.8 percent. These things are not the end of the world. But they may describe public investor uncertainty about the value of firms that are burning large quantities of cash to expand their top line. Box, MobileIron, and a host of others have endured related declines.
Finally, keep in mind that for the above-mentioned companies, we are largely discussing cash burn, and not full losses including other, often non-cash costs like share-based compensation. When vetted with regular accounting metrics (GAAP), for example, Twitter remains massively unprofitable.
That means that even viewed through an altered lens, things are still not overly rosy. You have to vet the power of top-line growth compared to burn, but it doesn’t seem controversial to say that we have seen investor sentiment slip slightly on the issue since the summer.
For now, Pure Storage has the capital that it needed to continue its growth. Welcome, and good luck.