The Tech IPO Boom: 2013 Successes and 2014 Speculation

Posted November 18, 2014 | By csponline

Last year was a big one for IPOs. Big name companies like Twitter and RetailMeNot went public and the resulting rise in tech IPOs caused enterprise companies to dominate the markets. An IPO, or initial public offering, is the first sale of stock that a company makes to the general public. If you are considering pursuing an IT degree, chances are you’ve been following the developments of these tech companies closely. Most of these companies are experiencing a transitory growth period, which means that investment can be tricky. However, for the businesses profiled in this post, the move from private to public was a successful one, and other companies are following suit. We’ve profiled some of the biggest IPOs of 2013 as well as speculations for potential moves for this year.

Twitter

Twitter priced its initial public offering at $26 a share in November of last year. That price put the company’s value at around $14 billion. The $26 rate is the amount that the IPO underwriters used  when selling shares to their clients, which include mutual funds and hedge funds. Twitter’s business model depends on ad sales, as the company runs ads for corporate accounts, sponsored tweets and topics on each user’s feed. Cofounder Evan Williams is the company’s largest individual shareholder, who had a 12 percent stake worth around $1.5 billion when Twitter went public. Six non-individual investors own 5 percent or more of the company, with the largest shareholder being the private equity firm Rizvi Traverse.

   Wix

Wix.com is based in Israel and helps companies operate and/or build websites. Its 7.7 million shares were sold at $16.50 each in November of 2013. Wix sells cloud-based templates that are used by small businesses to design websites. Over 40 million organizations, businesses, professionals and individuals use the Wix platform. Proceeds from this IPO went to research, development, recruiting and marketing expenses for the company itself.

   Tableau Software

Tableau Software, a data-visualization software company based in Seattle, went public in May of last year. Their stock was priced at $31 per share, with market capitalization being $1.7 billion. Tableau was the first Seattle-based tech company to go public since Zillow did in 2011. The American computer software company produces interactive products that are focused on business intelligence.

   RetailMeNot

RetailMeNot.com operates the world’s largest digital coupon marketplace, enabling consumers to find thousands of digital coupons from one site. The company offers coupons from over 60,000 retailers and contracts with over 10,000. It went public in July of last year, with shares priced at $21 each. Half of those shares were sold by the company, while the other half were sold by existing investors. The company’s 2012 revenue was almost $145 million. Bankers for this IPO transaction were Goldman Sachs, Morgan Stanley and Credit Suisse.

Potential IPOs

With the recent rise in the number of IPOs, it’s not surprising that more and more private tech companies are thinking about joining in. There is considerable speculation about whether or not the following companies will go public this year:

    GoDaddy Operating Company

This company deals in website registration and hosting — but you might also recognize it from some of its provocative Super Bowl commercials. More and more companies are using GoDaddy for Web hosting and online services like payments and booking. Because it is a well-known brand that is a top player in its market, it makes sense for GoDaddy to take advantage of the popularity of cloud IPOs. And because the company applied to go public before subsequently withdrawing its plans in 2006, it could finally be time for it to make the leap. GoDaddy is also moving beyond the U.S. market by working on expanding into Spain, France, Germany and Portugal. All of this points to the strong possibility of going public.

   Dropbox

Another cloud-based company that could go public this year is Dropbox. It specializes in backup and storage services. It has over 200 million users and 4 million businesses as clients, and has been growing its user base consistently since its founding. One of Dropbox’s main competitors, Box, is also rumored to be moving toward an IPO. This means that in order to stay competitive, Dropbox may need to make the move as well. Both companies offer their services on a “freemium” basis, meaning that users get a certain amount of storage for free but must pay for enhancements and additional services. Dropbox values itself at over $8 billion, which makes it fit in with other cloud companies that have decided to go public as well.

   King

Whether you play it yourself or are just annoyed by how much others talk about playing it, you’ve probably heard of Candy Crush Saga. It has an average of around 93 million players per day and is the most popular game owned by King. The company has more users per month than Twitter, just to put things into perspective. King has filed to go public this year, which means it will have access to the resources required to develop and market new games. The question with this company is whether or not it will be able to duplicate the success of Candy Crush with its other games, such as Pet Rescue and Farm Heroes. Candy Crush itself was the highest grossing app on iPhone and iPad in 2013, but concerns abound in the tech industry about King’s long-term success. Less-than-avid interest from investors could cause King to put its IPO on hold, so it’s also one to watch, too.

Whether or not you are interested in working in cloud development or any other market that is high in tech IPOs like these, a degree in information technology is a great way to get started. Concordia University, St. Paul’s Bachelor of Arts in Information and Technology Management connects technology and business in a real-world manner that allows you to meet the challenges of today’s tech industry. Visit Concordia’s online IT degree program page for more information.