Blood on Wall Street

by Brenon Daly

It wasn’t quite blood on the streets. But the deep red that has colored Wall Street in recent trading sessions did kill the IPO dreams of at least a few companies. Not so with Anaplan. The corporate performance management vendor priced its offering at the top end of its range, and then saw its newly minted shares tack on another one-quarter in value as they debuted on the NYSE on Friday.

Already a unicorn in the private market, 10-year-old Anaplan boosted its value substantially in the IPO. With 124 million shares outstanding (or 150 million on a fully diluted basis), the company created roughly $3bn of market value. That’s about twice the value realized by rival Adaptive Insights, which was on track for an IPO of its own but then sold to Workday instead in June.

Of course, investor sentiment has deteriorated noticeably between those two exits. Anaplan priced its offering amid a sharp and sudden stock market rout. (Just in the two trading days before Thursday evening’s final decision to come public, the Nasdaq Index plummeted almost 5%.) That broad-market mauling was enough to convince two non-tech firms to shelve their plans to join the ranks of public companies.

The current worries on Wall Street show up even when we compare Anaplan with the previous enterprise software IPO, last week’s offering by Elastic. The open source search software provider came public valued at an eye-popping price-to-sales valuation in the mid-20s. And Elastic shares have held up solidly over the past week, even as most other stocks have been roughed up. That’s particularly true for many of the dozen enterprise-focused tech vendors, including Zuora and DocuSign, that have come public so far this year.

For its part, Anaplan secured a more-sedate price-to-sales valuation in the mid-teens. (The company’s roughly $3bn market cap is 15x its trailing 12-month sales of $200m.) Still, the fact that Anaplan found plenty of buyers for its stock, as most investors were selling stocks, has to count for something.

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