SailPoint’s IPO on Thursday failed to meet the expectations of those hoping it would signal a resurgence in tech IPOs.
The stock closed its first trading day below its initial price of $23, with only a slight recovery on Friday, closing above $24. However, that is far from the explosive debut that companies and venture capitalists had hoped for.
Take ServiceTitan, for example, which had an incredibly successful IPO just a few months ago in December. Its share price surged from $71 to as high as $105 on its first day, and it continues to trade around $100.
A series of back-to-back successes would have been a clear signal that the long-dormant IPO market is finally opening up again.
Instead, retail investors are approaching with caution rather than exuberance.
Nick Einhorn, VP of research at IPO expert firm Renaissance Capital, told TechCrunch, “I’m hesitant to draw too many conclusions about the demand for tech or software IPOs based on this. While SailPoint has good growth, it might not have been distinguished enough in the cybersecurity sector to command a premium sales multiple.”
Renaissance Capital, a firm that tracks IPO market trends, also manages an IPO exchange-traded fund (ETF). SailPoint’s offering was unusual because it wasn’t a typical startup IPO. The company had been publicly traded until 2022 when private equity firm Thoma Bravo took it private at a valuation of $6.9 billion. Thoma Bravo remains the majority owner.
This was a leveraged-buyout IPO rather than the usual venture-backed startup offering. Companies that go public with venture capital backing typically offer the kind of growth potential that excites investors—like ServiceTitan did.
On the bright side, SailPoint priced its initial 60 million shares at $23, higher than the initial range of $19 to $21. The company raised over $1.3 billion, which it plans to use for operations and to reduce its $1.5 billion in debt, as outlined in a regulatory filing. Its current market cap sits at about $13 billion, a step up from Thoma Bravo’s initial purchase price.
CEO Mark McClain defended the offering, saying, “In no way did we consider this a disappointing IPO. We went from a mid-point of $20 to a close of $25 on Day 2. In our minds, it’s a very successful IPO.”
Nevertheless, for those hoping that this marks the start of a new wave of IPOs—especially employees of late-stage startups watching their stock options—clear signs of a recovery remain elusive.