initial public offerings (IPOs) trading on American exchanges

Friday, October 19, 2018

SolarWinds (SWI) began trading on the NYSE on 19 October 2018

  • SolarWinds priced 25 mln share IPO at $15.00, the low-end of the reduced $15.00-16.00 range
  • Opened for trading at $15.30

SolarWinds Corp. CEO Kevin Thompson and employees celebrate the company's IPO during the Opening Bell at the New York Stock Exchange (NYSE) in New York, U.S., October 19, 2018.

Any thoughts on Solarwinds going public tomorrow? Small float and high growth? Thanks a lot!

Yes sure.  First, this isn't a clean new from scratch IPO.  This was a formerly public company which got taken private.  And what I can say is that it wasn't one of my favorite cloud companies back then -- as I def. favored names like WDAY, SPLK, CYBR, DATA, NEWR, VRNS etc...  And all those names did just as well if not magnitudes better than SWI (Solarwinds) did.  There were times I had looked at SWI as it was trading at a pretty attractive valuation vs. it's growth rate.  

However, back then 2015-16ish (before it was acquired), a name like SPLK and VRNS as just a couple examples lined up much better on a Price/Growth basis.  So in short, I have to see where they price SWI and how much it pops.  As given it's growth I don't think it should garner a mega premium multiple.  Just doing some back of the napkin math... just a 20% pop off the IPO price would put this name around 7X forward REV's.  That's not super cheap for a sub 20%ish grower. 

Bottom line, at or below the 'lowered' IPO price there's definitely value.  However, if they really pop it, I'll avoid it at first and see if it sets up for a ST IPO "runner" trade.  However, on a big pop I'm more likely to trade this just like I did with SVMK -- where I avoided the early pop/hype.  Then I let it drop and drop and drop and ended it picking it up in the high $11's or almost 40% below where they traded their first day.  

No comments:

Post a Comment