Appian shares swing a hard +35% after IPO
The tech industry has been hit by many IPOs in the first quarter of 2017. Some, like the Snap Inc. IPO, were successful. It’s too bad that the company is doing poorly after its successful open. Others have not been as lucky. The tech firm IPO market is volatile and launching right now is a risk for any company that moves ahead with that.
Appian Corp (APPN) officially joined the list of up-and-coming rising tech stars on Thursday following a successful debut into the public market. According to Renaissance Capital, the company initially wanted to sell off a 6.3 million block of stock in the range between $11 and $13. Thursday was a good day for Appian because the company did not only hit that target, it surpassed it. The Appian shares were going for $12 each during the day on NASDAQ. By the close of the first trading day, share value had jumped +35%. If Appian continues trading at the price it is at now, it could top its current $715.5 million market cap, especially when you factor in the over-allotted shares that the company has not sold yet.
For a company that operates in the market it does, Appian performed exceedingly well on its first day on the market. It’s not that the company is a weak contender. On the contrary, Appian Corp has been at the top of its game for the past two years. If you look at its bottom line, you will notice that revenue has been going steady. Not only that, it has been toplining at over a $100 million each year from 2014 through to last year. It is also worth noting that gross profit margins have seen an uphill climb. In 2015 the company made $7.85 million in net profit, but in 2016 the company almost doubled that amount to $13.3 million. But even with the financial strength that Appian offers investors, it is still behind some of its biggest competitors in the market.
Appian operates low code analytics for other institutions and companies. In short, it uses simple code to teach its clients how to come up with and customize their suite of apps. That way, a business can do anything (legal anyway). But Appian is a small fish when you are looking at the entire market. Companies like Salesforce (NYSE: CRM) and ServiceNow (NYSE: NOW) have been on the market for longer than Appian. These two companies are the direct competitors that Appian faces. By the close of business day on Thursday, Salesforce shares were trading at +1.6% while ServiceNow shares were going at +1% their IPO pricings. These figures are daunting considering that Salesforce and ServiceNow operate in large scale while Appian only has 280 customers at present.
Appian CEO Matthew Calkins stated that the small scale was not necessarily a bad thing for the company. “Having little funds available to us has made us innovative and differentiated,” he said. That part is true, but it does not rule out the fact that the good performance of Appian stock might be the only thing saving the company from a takeover.