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Pure Storage IPO: PSTG Shares Fall 5% in Debut

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Flash storage company Pure Storage ( PSTG ) launched its IPO Wednesday on the New York Stock Exchange, pricing its shares at $17 a share. Unfortunately its first day of trading was a forgettable one though, as the company's shares opened lower at $16.74, and eventually closed the day down -5.82%, ending at $16.01 a share at market close.

There was a great deal of speculation on the Pure Storage IPO in the time leading up to the deal, and that investor interest was clearly shown early on as 5.8 million shares were traded in just the first five minutes of trading.

Pure Storage IPO Basics

Pure Storage valued itself at $3 billion in its S-1 filing in August, and the company was expecting to raise $300 million in the offering. The company has seen revenues skyrocket in the last two fiscal years, rising 603% and 308% in that time period. Just in its most recent quarter product sales rose by an astonishing 144%.

Despite major growth in its revenues, profitability is something that Pure Storage is far from. According to its filings, the company has accumulated a deficit of $390.7 million, and that was as of April 30, 2015. Pure Storage won't be judged on profitability in the near-term, but eventually the company will likely have to answer to its investors for its earnings, or lack thereof.

Moving Forward

Despite a poor performance on its first day of trading, the future remains bright for Pure Storage, as clearly seen in its large amount of revenue growth, and the fact that it operates in a $24 billion industry. CEO Scott Dietzen echoed this positivity as well, telling CNBC, "This is a marathon not a sprint… Don't look at the stock today, think in quarters and in years, because that is the kind of company we're looking to build".

The performance of the Pure Storage IPO does speak to the current state of the IPO market though, and a lower first day will more than likely further concerns from investors and from companies considering IPOs in the near future. There have only been 19 tech company IPOs thus far in 2015, with 46 companies refraining from launching their offerings as stocks experience their worst quarter since 2011.

The number of IPO launches will likely remain low as 2015 comes to a close, and it will take a much better performance from stocks for companies that are considering IPOs to actually launch them. Investors were and should continue to watch Pure Storage though, as the future remains bright for this relatively young, quickly growing data storage firm.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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