(Reuters) — Shares of data storage company Pure Storage Inc fell in their debut on Wednesday, highlighting a tough market for IPOs.
The company offers flash memory as an alternative to disk memory or a combination of flash and disk.
Proponents of flash storage say the system is faster and less susceptible to mechanical failure.
Pure Storage’s shares, offered at $17 each, were down 5.9 percent to $16.00 in late morning trading, valuing the company at about $2.56 billion. The company raised $425 million from the sale of 25 million shares.
Founded in 2009, the Mountain View, California-based Pure Storage has focused on growth over profitability and has not made a profit since its inception. Revenue rose four-fold to $175 million in the fiscal year ending January.
It’s not clear when Pure Storage will break even, said Francis Gaskins, president of research firm IPO Desktop.
“Investors’ time horizon for profitability has shortened,” he said.
Several companies that debuted in 2015 are trading below their IPO price, hit by weeks of market declines. Some firms have also delayed going public.
With volatility across global markets this year, 46 companies had withdrawn IPO plans as of Sept. 30, compared with 38 in the same period last year, according to Renaissance Capital data.
Bermuda-based mobile phone company Digicel Group Ltd, which was expected to be one of the largest IPOs this year, withdrew its plans earlier this week due to “current conditions, particularly in emerging markets.”
Pure Storage’s investors include T. Rowe Price, Tiger Global Management and Index Ventures.
Morgan Stanley, Goldman Sachs Group Inc, Barclays Plc and Allen & Co LLC are lead underwriters.
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(Reporting by Sudarshan Varadhan in Bengaluru; Editing by Savio D’Souza and Ted Kerr)