Earlier this month, the tech industry broke grounds in the market. Tech IPO Acacia Communications shocked everyone by deciding to take on the market, but what the company did next brought everyone’s hopes to a new level.
While the year hasn’t been the best for tech IPOs on the market, few have still tried, like SecureWorks for example. SecureWorks, a product of the Dell Incorporation, was an IPO designed to help prevent online scams by providing a security system for its users. The product was considered to be a valuable tool, yet when it hit the market, stock shares were sold at a measly $14, which was only about 11 cents more than the company’s opening price of $13.89 a share.
With this being the first big tech IPO to try the market this year, there were mediocre expectations for Acacia Communications as they tried their hand at the stock market. But upon hitting Wall Street, Acacia had some surprises in store. Acacia Communications started their opening price at $23 per share, but by the ends of the first day of trading, the company was up to $30 a share. This seemingly small jump in price yielded a 35% rise in profits for the share, which was groundbreaking for the tech IPO industry this year.
So far, it has been a poor year for the IPO market, as few have tried and most have failed coming public on the market. Between finding supporters to back their funds, and getting the word out about the success of the company and the product, it can be hard to find the financial backing to succeed on the market if you’re a tech IPO. But the only way to grow your company, better your product, and increase your sales, is to take the company public and let it ride the crazy roller coaster that is the stock market, and hope for the best. With success on the market, a company can find deep pockets in investors, and can also get publicity that will shed more light on the product and get more people talking. But that’s only if the product can handle the market.
Deciding to take their IPO to the stock market is a risk, as a failing stock could lose the company money, and their reputation for the future. As it has not been a terrific year in the market for tech IPOs, many have abstained from taking their IPO to the market at all. But Acacia Communications was confident enough in their product to try out the market.
The product invented by Acacia Communications was a fiber-optic transmission system, which allows for higher speeds of internet service, and more data to be held and transmitted by the fiber wires. After showing to be a profitable product, Acacia Communications took it to the market, with the quiet confidence that it would show well. And with a product that would service millions of people across the world, in a way that would create less headaches, less stress, and more time for other things, how could these fiber-optic transmitters fail?
As for the rest of the year, it will be interesting to see whether or not other tech IPOs have the guts to bring their companies to the market with the hope of following in the footsteps of Acacia. As it is still a pretty stale year for IPOs on the market, perhaps it was simply the brilliant product Acacia Communications created, and not the turn of the market for tech IPOs… Only the future will tell.