Ibotta, a popular cashback rewards app, made its debut as a public company on Thursday, opening at $117 per share. This was a significant increase from its initial public offering (IPO) price of $88 per share, which was already higher than the proposed range of $76 to $84 per share. Despite increasing the size of its offering earlier in the week, with existing shareholders selling just under one million additional shares, the stock price held steady above its IPO price, trading at around $100 at the time of writing.
Some analysts believe that Ibotta may have left money on the table by pricing its IPO too low. Nicholas Smith, a senior research analyst at Renaissance Capital, suggests that the company could have raised more funds if it had priced its shares higher. He points out that while Ibotta has been successful in partnering with Walmart and generating revenue through its platform, there is potential for further expansion beyond this single partnership. Investors who are bullish on Ibotta’s ability to expand its third-party platform may feel that the IPO price undervalued the company.
Ibotta’s successful IPO marks the third major tech IPO in the United States this year, and it follows a trend of tech companies pricing well and experiencing immediate trading success. Reddit and Astera Labs are two other companies that recently transitioned from private to public markets and have seen their stock prices exceed their IPO prices. This positive reception indicates an increasing appetite for IPOs, particularly in the tech sector.
However, it is important not to get too carried away with the notion of a booming tech IPO market. Ibotta’s success can be attributed to its pivot towards business sales rather than a direct-to-consumer model, which has helped the company achieve profitability. Traditional tech IPOs typically involve companies in growth mode but still operating at a loss. Therefore, the upcoming IPO of Rubrik, a data management and security company, may provide a better test of investor appetite. Rubrik is currently unprofitable and growing at a slower rate than Ibotta, but it does have a compelling story in terms of its cloud revenue. If Rubrik’s IPO performs well, it may encourage other unprofitable tech companies to consider going public.
Nicholas Smith agrees that the Rubrik IPO will be an even bigger test for the tech market, given the company’s weaker financial position. It remains to be seen how Rubrik’s debut will fare, and this will provide further insights into investor sentiment towards tech IPOs.
Overall, the tech IPO market seems to be showing signs of renewed interest and appetite among investors. However, it is important to consider each company individually and evaluate their financial position and growth potential before drawing broad conclusions about the market as a whole. The performance of Rubrik’s IPO next week will provide valuable insights into investor sentiment towards unprofitable tech companies.
