The expiration of the IPO quiet period represents a short-term opportunity to benefit from the release of positive reports from the stock's underwriters. When the IPO quiet period expires, Apptio's underwriters will have their first opportunity to weigh in on the IPO and release detailed reports about the offering.
The stock looks poised to move higher over the short term because the reports will likely be positive, as Apptio is a solid company that markets to a strong customer base, and the IPO priced above the anticipated range and the stock then moved higher.
However, Apptio isn't recommended as a long-term investment, as there are serious concerns about the company's ability to maintain profitability.
Apptio is a cloud-based technology business management provider. The company developed a management system for chief information officers that allows those information technology leaders to have a system comparable to those available to the finance, human resources and sales functions of enterprises.
Apptio's management system is designed to help chief information officers create efficiencies and run their IT departments like businesses, helping their enterprises remain competitive.
The company has an impressive group of customers, including 40% of the Fortune 100.
Apptio's customers come from a variety of industries and sectors including consumer goods, energy, finance, government agencies, health care, manufacturing, media, professional services, retail and transportation. Three of APTI's more notable customers are eBay, KeyBank and Microsoft.
Sachin Gupta is a co-founder of Apptio and has served as chief executive, president and director since October 2007. Before joining Apptio, he gained experience at IBM, iConclude, Opsware and Rational Software.
Lawrence Blasko has been Apptio's chief revenue officer since July. Previously, he served as Apptio's senior vice president of worldwide sales.
Blasko gained tech experience at Computer Associates, Opsware and Veritas.
Apptio's year-over-year revenue rose 21% to $129.3 million between 2014 and 2015 and 45% between 2013 and 2014.
Shares of Apptio are a short-term play because of concerns over increasing losses and the company's own admission that profitability might be a challenge. The company reported losses of $23.7 million, $32.9 million and $41 million in 2013, 2014 and 2015, respectively.
Apptio also indicates that its revenue may decline.
In addition, Apptio had debt of $183.7 million as of June 30.
Apptio priced its shares above its expected price range at $16 per share, raising $96 million in its IPO. It surged 40% when it debuted, closing at $22.55.
Shares are still trading higher than the IPO price range of $13 to $15, at $20.08, as of Wednesday's close.
The lead underwriters for the IPO are Bank of America Merrill Lynch, Goldman Sachs and JPMorgan Chase. Other underwriters are Barclays Capital, Jefferies, Pacific Crest Securities and RBC Capital Markets.
Apptio is a venture-capital backed IPO. Notable shareholders include Greylock Partners (16.5% stake), Madrona Ventures (16.6% stake) and Shasta Ventures (9.5% stake).
Investors should establish a long position in Apptio over the next week, ride the stock higher when reports are released and sell shares shortly after the IPO quiet period expires.
This article is commentary by an independent contributor. At the time of publication, the author owned APTI.