Tintri held its one-day delayed IPO on Friday and investors responded with a yawn.
The stock was priced at $7 a share and opened basically flat at $7.12. On its first day of trading it has so far stayed well below $8.
Before going public, Tintri had raised $260 million from venture investors and was valued at $800 million.
With the performance of this IPO, the company is now valued at about about $231 million, based on $7.50 a share and its roughly 31 million outstanding shares, (if the IPO’s bankers don’t buy their optional, additional roughly 1.3 million shares.)
In other words, this IPO killed a good $570 million of the company’s value.
There were signs this IPO would not be spectacular. Tintri was supposed to go public on Thursday, but hours before that, it delayed the IPO so it could lower its target price and reduce the number of shares it planned to sell.
On Thursday it announced a new price range of $7-$8 per share, down from its previously planned range of $10.50 to $12.50 per share. The company initially hoped to raise about $100 million and settled for a tad over $60 million.
We asked Tintri CEO Ken Klein why the company chose now to do its IPO when there were indications that the investors were not in love with the company.
“Our customers love us a lot more than our investors. I do believe that gap will close,” he told us. “This funds our growth.”
He also said that it was an “awareness event for the company,” helping draw the attention of the reseller community that helps sell and service its products, and said that being public will help it win more business from Fortune 100 companies because it helps with “credibility.”
On the other hand, there are a lot of reasons public market investors weren’t red hot for this company. First of all, it plays in a traditionally troubled market. Tintri offers flash storage products for companies, which is storage built with the same technology used in smartphones and thumb drives. It says that its storage products work well with applications running on cloud services, like Amazon Web Services (AWS).
Storage vendors have not fared well over the past few years, as businesses increasingly store their data in cloud services like AWS S3. The one-time giant in the market, EMC, was acquired by Dell. Former startup darlings have had less-than-stellar IPOs, like Pure Storage, or they’ve been picked up in fire-sale acquisitions. And many other flash companies have also struggled.
But Tintri’s main problem was likely its slowing growth. It had a loss of $100 million on total revenues of $125 million in its last fiscal year, 2017, with year-over-year revenue growth slowing from 73% in 2016 to 45% by 2017.
On the upside, there is one big winner in Tintri’s IPO, its co-founder, former CEO and current CTO Kieran Harty.
He still owns about 6% of the company post IPO. While none of the principal stakeholders, including Harty, sold any shares in this IPO, at $7 per share his stake is worth nearly $13 million.