Hello from the end of trading here on the East Coast where two companies have closed their first week as newly-public entities. For Cloudflare and SmileDirectClub, however, the week is ending on very different notes.
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SmileDirectClub set a record this week, but not a good one. After the company’s IPO priced well, with a final per-share dollar-cost above its projected range, SmileDirect’s value plunged in its first day of trading. Bloomberg reported that it was the “firm since at least 2008 to raise more than $1 billion and price its IPO above range, yet fall in its inaugural trading day.”
Ouch. But the company had some wins in the week all the same. Its valuation soared from just over $3 billion in its final private round to nearly $9 billion in its IPO. Sure, it gave back nearly a fourth of that sum in its first day, but its shares rallied today, bringing it to $18.68 per share. Not great, given its $23 per share IPO price, but up over 12 points on the day.
So SmileDirect struggled to defend its new valuation after putting about $1.3 billion into its accounts through the transaction. Let’s turn to our second offering.
Cloudflare’s ramp to its IPO was a bit more linear. The firm set a price range that roughly valued it at its final private valuation. Then it raised that range by $2, to $12 to $14 per share. Then it went public at $15. It opened at $18, and closed precisely at $18, up 20 percent from its going-public price.
That’s effectively textbook for an IPO. Cloudflare added a few billion to its value during the transaction.
I spoke with the company’s CEO earlier today (post coming Monday, I’m tired) which provided some additional context to the public offering. Like, for example, Cloudflare formally started its IPO process in March. And that some investors believed that $15 was a bit too high a price for its equity. And that the company has been running, in its view, like a public company for some time. This likely provided the corporate maturity required to get public without ruckus.
To summarize, SmileDirect went public for $23 per share and is worth $18.68 today. Cloudflare went public at $15 and is now worth $18 per share. Next up, Datadog and Ping Identity. Peloton and WeWork are right after.
Illustration: Li-Anne Dias.
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