Confluent Inc. shares surged out of the gate Thursday on their first day of trade and closed 25% above a pricing that was already above its forecast range.
Confluent
CFLT,
+25.06%
priced its shares at $36 apiece late Wednesday, after estimating shares to be priced between $29 and $33 apiece last week. With 23 million shares being offered, the enterprise “data-in-motion” platform raised about $828 million. Unlike other IPOs, the company did not give underwriters the option for additional shares.
Shares started trading at 12:23 pm Eastern Thursday and surged to an intraday high of $47, before closing up 25% at $45.02.
With about 252.4 million shares outstanding, Thursday’s stock move pushed the Mountain View, Calif.-based company’s valuation well past the $10 billion mark.
The company’s software platform operates on the principle that data is no longer a commodity that can be efficiently stored in traditional databases because that data is constantly changing as interactions between businesses and their customers happen on a real-time basis. Rather than being a way of linking containers of data together, Confluent said it sees itself as a central nervous system for a given customer’s ever-changing data flow.
Confluent estimates it is going after a $50 billion market opportunity that’s expected to grow to more than $90 billion over the next few years. While public cloud providers from Microsoft Corp.
MSFT,
+0.53%,
Amazon.com Inc.
AMZN,
-1.56%,
and Alphabet Inc.’s
GOOG,
+0.65%
GOOGL,
+0.31%
Google offer products that compete in areas of Confluent’s core service, they’re also partners.
The company’s confident that the relationship between itself and the cloud providers will stay one of “co-op-etition” because of the volume of data and workloads it directs to those providers, Confluent Chief Financial Officer Steffan Tomlinson told MarketWatch in an interview.
“And they really like us for that,” said Tomlinson, who came to Confluent in June 2020 after leaving a similar position at Google Cloud.
One example of Confluent’s “data-in-motion” capabilities came to light during the COVID-19 pandemic. Tomlinson said that customer Lowe’s Cos.
LOW,
+0.32%
used the service to assist in curbside pick-ups, which required real-time logistics between the store and its customers to pull off smoothly. Similarly, retailers like Walmart Inc.
WMT,
+0.70%
use the service to update product inventory real-time for online customers as it moves through the system.
Read: Confluent IPO: 5 things to know about the ‘data-in-motion’ platform
Early investors Benchmark, Index Ventures Growth, and Sequoia Capital have seen their stakes skyrocket as they contributed to the bulk of the company’s $456 million in venture funding, according to Crunchbase data.
At last check, Benchmark’s investment in 35 million in Class B shares was valued at $1.58 billion; Index Ventures Growth at 29.8 million shares was at $1.35 billion; and Sequoia’s stake at 21.4 million shares was at $963 million.
The almost-7-year-old company’s IPO comes as the stock prices of recently public companies are struggling. Year to date, the Renaissance IPO ETF
IPO,
+0.70%
has ticked up 2.4%, while the S&P 500 index
SPX,
+0.58%
has gained nearly 14% and the tech-heavy Nasdaq Composite Index
COMP,
+0.69%
has advanced nearly 12%.
