Software maker Atlassian pops in debut, brings light to IPO market
By Heather Somerville
(Reuters) - Atlassian Corp Plc brought some cheer to the end of a dour year for technology public offerings on Thursday with a 32-percent pop on its Wall Street debut, demonstrating that investors are eager to reward growing tech companies that can reliably turn a profit.
Shares of the Australian software maker, which helps companies collaborate and manage their operations, ended their first day of trading at $27.78, up almost a third from the initial public offering price of $21.
The Sydney-based company closed out the day with a market value of $5.8 billion, well above its last private valuation of $3.3 billion last year.
The performance shone some light on a bleak stretch for IPOs, on pace to have their worst year in terms of dollars raised since 2009, according to IPO fund manager Renaissance Capital. First-day returns from IPOs this year are in negative territory.
"It's always hard to anticipate the enthusiasm in the market," said Jay Simons, Atlassian president and head of the company's San Francisco office. "There is a very small percentage of IPOs even in the last couple of years that have moved their price range up and then priced above the range."
Atlassian's IPO raised $462 million after pricing just above the expected range of $19 to $20. It is the sixth-most highly valued IPO of the year.
Its strong debut signals that not all of the 145 tech 'unicorns' - venture-backed private companies worth $1 billion or more - are overvalued. Atlassian, unlike most of those unicorns, makes a profit.
Some startups struggling to make money have been hit with discounts in both the private and public market. Loss-making mobile payments company Square was valued at $6 billion in the private market but took a 42 percent haircut on its valuation in its IPO last month. Continued...