Public Markets

Domo Gives Back Early Public Market Gains

Domo’s IPO is a cautionary tale about private market valuations and out-of-control spending. But after the firm cut its valuation dramatically to get itself over the line, something nice happened: its shares went up. Domo’s IPO pop seemed to indicate that companies willing to humble themselves to go public would be rewarded.

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That lesson, however, is slowly slipping away from Domo.

The firm did the intelligent thing when it went public, slashing its valuation from $2.3 billion (its last private price tag) to just over $500 million at its IPO price. By doing so, Domo picked up a nice first-day splash and positive media coverage to boot.

For a company instantly worth less than the capital it had raised to build itself, the following headlines were likely welcome:

And the company did well. After pricing at $21 per share, Domo’s stock rose as high as $28.86, up more than 37 percent. At that point, using rough math, the firm was worth over $687 million.

Since then, the company’s shares have come back down to Earth. Indeed, at the time of writing, Domo shares are off over 2 percent to $23.21 per share. That’s up just 10.5 percent from its IPO price. What once looked like the public market repricing Domo north from its embarrassing IPO decapitation now looks instead like a leaking balloon.

That’s because, I would wager, nothing fundamental has changed about the company—other than the window in which it will need to raise more money has been pushed out a few quarters. Unless something changes at Domo, it’s going to be right back where it was before.

Regardless, the firm made it public. This tells us the IPO markets are very open, public market investors will accept lesser-performing customers at a massive discount, and private investors are often incredibly wrong in how they value startups. It is all pretty bullish, frankly, or at least as bullish as you can hope for in a market that still maintains a hold on some of its marbles. Maybe.

And with this piece, we largely let go of Domo. It is no longer under the main Crunchbase News charter.

Good luck.

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