The tech sector is flying, and this cybersecurity giant is confident the time is right to float.
Wall Street welcomed two more tech stocks today in a further test of investor appetite ahead of potential IPOs for cybersecurity firm McAfee and home rental company Airbnb.
The debuts of data analytics company Palantir Technologies (NYSE:PLTR) and workplace app Asana were made through what is called a direct listing, enabling existing investors to monetise their shares, rather than the more usual initial public offering (IPO) of shares. Streaming business Spotify Technology (NYSE:SPOT) and communications firm Slack Technologies (NYSE:WORK) also took the direct route in 2018 and 2019.
Palantir was valued at US$15.8 billion at today's opening bell after the New York Stock Exchange set a reference price of $7.25 a share, with Asana worth $3.25 billion based on a starting price of $21 a share.
Their debuts follow a spectacular start to Wall Street life for Snowflake (NYSE:SNOW) after the Warren Buffett-backed data warehouse company more than doubled in value on its first day of trading.
The shares closed last night at almost $260, which compares with the IPO price of $120 and the $245 seen immediately after trading started on 17 September. Snowflake sold 28 million shares and raised $3.4 billion in what was the biggest US listing of the year to date and also reportedly the biggest software IPO of all time.
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Trading under the ticker SNOW, investors have chosen to focus on Snowflake's rapid revenues growth and potential rather than the losses of US$384 million generated last year.
The trend for loss-making tech companies to pursue stock market listings reached its peak during the IPO euphoria of 2019 when Uber and Lyft were able to tap investors despite the pair's far-from-certain route to profitability.
Airbnb, which reportedly made a loss for 2019, is also thought to be targeting a Wall Street listing by the end of the year. Its original flotation plans were disrupted by the pandemic, but with many travellers currently shunning hotels, Airbnb may yet take advantage of favourable IPO conditions. It recently filed confidential IPO registration documents with US regulators.
McAfee plans second IPO
California-based McAfee said on Monday that it had filed papers with the US Securities and Exchange Commission, although it added that it had yet to determine the number of shares or the price range for the proposed Nasdaq offering.
This would be a second IPO for McAfee, having been taken private by Intel Corp (NASDAQ:INTC) in a deal worth $7.7 billion in 2011. Buyout group TPG bought a majority stake from Intel in 2017.
McAfee's filing this week disclosed revenues of $2.64 billion for last year, with net losses improving to $236 million from the $512 million seen a year before.
London playing catch-up
IPO activity in London has been much slower, although confidence in the new issues marketplace has been boosted by the strong performance of THG Holdings (LSE:THG).
The Hut Group business shot up in value to more than £7 billion on the first day of conditional dealings and still stands at 600p compared with the offer price of 500p on 16 September.
Interest in the company has been driven by its exposure to the fast-growing beauty and nutrition markets through online brands Lookfantastic and Myprotein, as well as the prospects for the company's high-margin e-commerce platform Ingenuity.
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The recent IPO prospectus revealed that THG improved overall revenues to £675 million in the first six months of this year, although it still made a bottom-line loss of £49.8 million.
Analysts at Liberum called THG a “gem of a business” that gave investors exposure to high structural growth as both a brand builder and a leading technology provider.
Smaller scale debuts for investors to look out for in London include David Beckham's Guild eSports and fintech entrepreneur Jonathan Rowland's banking app Mode after they recently filed intentions to float.
Private equity firm CapVest is also reported to be mulling the possibility of an IPO for Eight Fifty Food Group, which includes Young's Seafood and pork processing business Karro.
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