Does Splunk's Successful Debut Resurrect the IPO Market?

Joel Anderson  |

The IPO of data company Splunk (SPLK) had the biggest opening day pop since the debut of LinkedIn (LNKD) in May of last year. In the company's first day of trading, its stock price spiked some 108.71 percent.

Splunk could hardly be considered the IPO that was on most people's minds. The pending IPO of Facebook (FB) has dominated most news coverage. However, San Francisco, CA company managed to reward anyone who got shares early by more than doubling in value before the end of the day. Splunk, a software company that makes a program to monitor and analyze machine generated data from applications, systems, and IT infrastructure, clearly entered into a market hungry for its shares.

Splunk's rising share price comes after the company priced its IPO well above expected ranges. The company had an expected range of $11 to $13 that came after it raised the anticipated price from the $8 to $10 it was at earlier this week. On Wednesday, though, the company let the stock out of the gate starting at $17 per share. Even this, though, was clearly lower than people were willing to pay. Selling a total of 13.5 million shares, 14.6 percent of the company, Splunk ended up raising just shy of $230 million.

Investors appear to have been attracted by the rapidly improving revenues for the company.

"We expect Splunk's growth rate to remain above 30 percent for at least the next three fiscal years and we believe it could be higher," wrote JMP Securities analyst Greg McDowell in a note to investors.

Splunk's first trading day was marred by an electronic glitch on the NYSE Arca. The electronic exchange made a halt in trading that was automatically triggered by the stock's volatility that lasted from 11:20 AM EST to 11:25 AM EST on Wednesday. Despite this brief halt in trading, a manual error still allowed some trades to come through. Because of the mistake, NYSE Arca had to cancel all trades that occurred during the halt.

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