Another IPO saw its stock surge on Friday as investors remain incredibly hungry for cloud-based software companies.
Medallia IPO surged 76% on first day of trading
Specifically, Medallia (NASDAQ: MDLA) saw it’s first day of trading on Friday as the San Francisco-based customer experience management software provider skyrocketed almost 80 percent on the day.
In the morning, the company was offering 14.5 million shares at a price point of $21 per share, which is already above the expected $16 to $18 per share analysts estimated.
In many cases over the past year, aggressively pricing ones IPO tends to be a risky move for companies, especially if they overestimate how enthusiastic investors are about the IPO.
However, a number of cloud-based companies have seen success before, so it wasn’t surprising to see the company pursue this pricing strategy.
It ended up paying off for Medallia, as shares skyrocketed up to $37 per share, representing a 76 percent gain over the course of 4-5 hours. After the offering, the company will have a market cap of an impressive $4.54 billion.
Enthusiasm for the stock seems to be based on solid ground, as Medallia reported January 2019 fiscal revenues of $313.6 million, up around 20 percent from the previous year. As for the April quarter, the company saw revenues of $93.6 million, up 32 percent in comparison to the same time last year.
“We designed the IPO to raise the proceeds and our profile, and get legitimacy with our customers, and it’s achieved all of that,” said CEO Leslie Stretch, who took the company public 11 months after getting hired as the chief executive. “About 4,500 companies raised Series A funding in 2000, and we were one of them,” he added. “Only 75 made it to IPO. People often leave before they cross the hill and their innovation really pays off… I encourage people when they have these ‘Eureka!’ moments, to capture them and follow through.”
While a highly impressive performance in comparison to most other unicorn IPOs which failed to generate the same results, Medallia’s IPO failed to break the triple-digit first-day growth rate seen by Zoom Video and CrowdStrike.
At the same time, the company’s valuation tends to be a bit more reserved, as estimated revenues of around $400 million would give the company a valuation of around 11 times sales, while Crowdstrike is trading closer to 38 times forward revenues.
The offering, which was led by Bank of America, Citigroup, and Wells Fargo, is likely to still see positive momentum going ahead into the upcoming week. The best performing IPO so far in 2019 wasn’t a tech stock at all, but rather Beyond Meat (NASDAQ: BYND), whose shares are now up 581 percent from its initial IPO price.
Medallia Company Profile
Medallia Inc is a software company based in United States. Its SaaS platform, the Medallia Experience Cloud, captures experience data from signal fields emitted by customers and employees. It utilizes AI technology to analyze structured and unstructured data from these signal fields across human, digital and internet of things, or IoT, interactions.
The company provides solutions to various industries including Automotive, Healthcare, Hospitality, Insurance and Retail among others. – Warrior Trading News
