Blogs -IPO Round Up

IPO Round Up


September 16, 2020

author

Beth Kindig

Lead Tech Analyst

IPO Report card:

As of late, the underlying goal of IPOs appears to be how to get retailers to pay as much as possible until the lock-up expires. It doesn’t matter if Berkshire invests unless you get a chance to buy at the same price. Your shares could lose 50% and Berkshire would break even. That’s not a public offering by any stretch of the word. Please keep in mind, that many winners in tech retrace well below their opening price (up to 50% below opening price in the case of Crowdstrike).

https://images.prismic.io/bethtechnology/bb742ecb-9ecc-4b94-9130-46ff6b0e40b4_IPO-report-card.jpg?auto=compress,format

Prior to Snowflake raising its opening price (for the fourth time), I had cautioned that: “the biggest risk of all is how much alpha will be left in the first year of trading by the time retailers are offered the crumbs.” When I wrote that, I did not imagine we’d see the opening price of $245. It was, in a word, astounding.

Like Warren Buffet says, the best part of investing is you don’t have to hit every ball. On that note, I can confidently say Berkshire would not be hitting the ball at 98X NTM revenue – but they sure hope you do.

Snowflake went public with an IPO price of $120. It opened at a 105% premium of $245, and closed on its first day of trading just under $254. Based on its opening price, this gave the stock a valuation of 98x NTM revenue if generously calculating 121% growth across all four quarters.

Keep in mind, in the chart below, companies over 40x NTM revenue are profitable.

https://images.prismic.io/bethtechnology/eec2961b-8041-4309-ad38-1517843d0a5d_ipo-round-up.png?auto=compress,format

Regarding their business, Snowflake reported 121% revenue growth YoY with a net retention rate of 158%. As stated, the company is not profitable. In the six months ending in July, they spent roughly $190.5 million on marketing while making $149 million in gross profit.

https://images.prismic.io/bethtechnology/63e4e19d-b168-4c31-afe9-40bce529f058_snow-ipo.png?auto=compress,format

I discussed Snowflake’s product strength in detail in my previous analysis, stating it demonstrated: “triple-digit growth, clear product differentiation, key metrics that prove product-market fit and gravity-defying management.” However, the price of the stock has become untethered from reality. As stated in the Forbes article, there is little alpha left over the next year and that is the primary risk.

JFrog

JFrog opened trading at a $71.20, which is 62% above its offering price. This gave the stock a valuation of 40x NTM revenue, which was the highest forward multiple in enterprise software at time of IPO until SNOW started trading about an hour later. The company provides DevOps software to organizations globally, enabling those businesses to build and release software faster and more securely.

JFROG posted an impressive 50% growth rate in its latest quarter with 81% gross margins and  positive 11% FCF margin, which is why they commanded such a high premium. However, the company faces a bevy of competition including Google Cloud, Amazon Web Services, and Microsoft Azure.  JFROG is a pure play, which I tend to favor; however, this IPO valuation is over its skis.

Sumo Logic

Sumo Logic began trading September 17th with an initial offering price of $22 a share. The first trade was 21% above the premium at $26.50 and closed at $26.88. Regarding key metrics, Sumo Logic stated that its dollar-based net retention rate has fluctuated between approximately 120% and 135% for each of the past nine quarters, which is notable. Their forward price/sales based on their opening price gives the stock a valuation of 8.3x NTM revenue.

https://images.prismic.io/bethtechnology/86a0c5a4-0775-436f-bc47-7a236bbd33bb_sumo-ipo.png?auto=compress,format

Sumo Logic’s biggest risk is their competition. Companies such as Splunk, Elastic, Datadog, Dynatrace, Microsoft and Google all have bigger budgets, greater name recognition and a larger customer base.

Amwell

Amwell (AMWL) is a mobile and teleheath platform that connects patients with doctors over video. The stock went public on September 17th with an IPO price of $18. It began trading with 42% premium at $25.51, and closed the day at $23.95.

Amwell’s YoY revenue growth accelerated from 31% year-over-year in 2019 to 77% year-over-year in H1 2020. Based on their opening price, this gave the stock a valuation of 8.4x NTM revenue.  

Unity

Unity (U) is set to open trading September 18th at an expected price range of $44-$48. This would value the company in the range of $11.6B-$12.6B. At the high end of the proposed range, Unity would trade at 14.2x NTM revenue. 

Unity grew revenue 39% YoY in the first half of 2020 and increased its net-retention rate to 142%, a strong indication of increased spending within its existing customer base.  With 93 of the top 100 gaming studios already Unity customers, it is crucial for the company to continue to drive higher spending among existing customers. 

Here’s how the string of tech IPOs stack up this week:

https://images.prismic.io/bethtechnology/2ecfd864-89c9-4c8a-9150-96700b380a8b_ipo-stack.png?auto=compress,format
head bg

More To Explore

Newsletter

a futuristic crystal ball displaying Nvidia with digital circuit patterns and stock market graphics.

Nvidia Stock Forecast: The Path to $6 Trillion

Two years ago, the April 2023 quarter delivered a historic 18% beat, followed by an even bigger 30% beat in July 2023. Compare that to the most recent quarter ending July 2025 — just a 4% beat, the sm

September 05, 2025
A close-up, low-angle shot of a physical Bitcoin coin surrounded by a glowing, intricate circuit board.

Bitcoin Bull Market Guide: When to Hold, Trim, or Re-Enter (Webinar) 

Our track record including a more recent 600% move in Bitcoin is not the product of hype but of a systematic framework—one built on technical analysis, on-chain metrics, and a close watch on global li

August 28, 2025
A smartphone with the Reddit app open, from which a rising stock chart graph is emerging.

Reddit Stock Blows the Doors Off - Can it Last?

Reddit’s stock has surged 62% in one month, easily placing the company’s earnings report as one of the best to come out of the tech sector this quarter. The world’s leading forum site has only 416 mil

August 20, 2025
Orange toolbox labeled 'ServiceNow' with digital interface displaying AI and data analytics dashboard, surrounded by various tools.

ServiceNow Q2 Earnings: Inside the AI Push Toward $1 Billion ACV by 2026

Last month, after ServiceNow reported second quarter results that exceeded expectations on multiple fronts, shares of NOW rose by 6%. The company is attempting to reposition itself beyond a provider o

August 14, 2025
Silhouette of a bull in front of a glowing Bitcoin coin, symbolizing a cryptocurrency bull run with potential market risks.

Is Bitcoin’s Bull Run Nearing a Top? What the Herd Missed at $16,000 and is Missing Now 

In late 2022, when Bitcoin was trading near $16,000, the I/O Fund issued a Strong Buy Alert. At the time, many of the market’s biggest crypto bulls were silent. Fast forward to today, Bitcoin is up ov

August 08, 2025
S&P 500 market forecast showing potential correction signs and key buy levels for 2025, based on technical analysis and investor sentiment trends.

Is the S&P 500 Overdue for a Correction? 2025 Forecast & Buy Levels to Watch

In our last Broad Market Report titled, Historic Uncertainty Meets $7 Trillion Dollar Debt Wall: What Comes Next For The S&P 500, the S&P 500 was trading near 5800 and still well below its February hi

August 01, 2025
A puzzle visually depicting different tech platforms and investments influencing search market share

Google Stock Clears Major Hurdle, Yet One Serious Concern Remains

This week, Google cleared a major hurdle with Search accelerating from 10 points of growth last quarter to 12 points this quarter -- putting to rest many doubts that Search monetization is at risk giv

July 27, 2025
Oracle stock forecast exploring potential to reach $1 trillion valuation as AI demand grows

Can Oracle Become the Next $1 Trillion AI Stock?

When it comes to AI cloud leaders, Oracle is not often mentioned, yet the company is quickly positioning itself to lead among Microsoft, Amazon and Alphabet when it comes to cloud growth over the next

July 18, 2025
Robinhood crypto trading volume vs. transaction revenue Q2 2025

Robinhood Stock: Spot Crypto Volumes May Lead to Incoming Volatility

Robinhood’s fundamental transformation over the past two years has been nothing short of remarkable. Crypto is driving strong revenue growth at 50% YoY in Q1, while TTM operating margin is approaching

July 11, 2025
Beth Kindig, Lead Tech Analyst at I/O Fund, interviewed on Fox Business discussing Nvidia’s earnings beat and solid guidance.

AI Stocks in 2025: What Every Investor Should Know

The market evolves quickly, and nowhere is that more apparent than in AI stocks, which continue to lead in both innovation and returns. At the I/O Fund, our deep coverage of AI stocks, combined with a

July 03, 2025
newsletter

Sign up for Analysis on
the Best Tech Stocks

https://bethtechnology.cdn.prismic.io/bethtechnology/e0a8f1ff-95b9-432c-a819-369b491ce051_Logo_Final_Transparent_IOFUND.svg
The I/O Fund specializes in tech growth stocks and offers in-depth research for Premium Members. Investors get access to a transparent portfolio, a forum, webinars, and real-time trade notifications. Sign up for Premium.

We are on social networks


Copyright © 2010 - 2025