But when the the tech company opened for trading Wednesday morning, the stock immediately fell below its $17 offering price. That's a bad sign for tech IPOs, which haven't been having a stellar year anyway.
Pure Storage arrived on Wall Street blessed by both Goldman Sachs (GS) and Morgan Stanley (MS) , the two top technology banks out there. Its sales have shot up from $6.1 million in fiscal 2013 to $158.7 million in the first half of this year.
Its flash storage technology, which it says is cheaper and simpler than disk-based storage, is blessed by tech-analysis firm IDC, which said, "The use of flash in both servers and network-based storage is transforming how enterprise storage solutions are being built, and is an absolute requirement for organizations that are leveraging virtualization, cloud, and other [emerging] technologies and applications. "
So why has the response to Pure's IPO been been so lackluster?
Pure's shares were priced at $17, the midpoint of the pre-deal range of $16 to $18 a share, valuing the company at about $3.1 billion. That's little to no better than the $3 billion valuation that Pure -- one of the dozens of private tech companies with billion-dollar valuations that have become known as "unicorns" -- commanded in its last private financing round in 2014.
So the IPO isn't exactly the coronation the company and CEO Scott Dietzen may have been expecting. But that could create an opportunity for investors.
Golfers will understand what Pure did. Rather than try to make a tough shot for eagle, they laid up. By pricing the deal less than aggressively, Pure has given itself a clearer path to making money over time with less risk.
Pure's IPO is a clear sign of the collateral damage coming from the market's correction since July, and by extension from the troubles in Chinese stock markets that set off a global worryfest.
Normally, a deal that fits the Silicon Valley profile of an emerging, potentially great growth company as neatly as Pure does would price above the range and zoom higher when shares open. If not, it wouldn't go out. In this tougher market, Pure priced modestly.
If Pure trades moderately over the next few days, the risk-reward balance points to taking a chance on scooping up some of the money left on the table for yourself.