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ServiceTitan, which offers financial and client management software for trades, went public on Thursday, much to the delight of retail investors. Inventory It quickly popped up from its opening The IPO sales price ranges from $71 to $105 per share on modest trading volume. It currently maintains a price above $100.
ServiceTitan’s success doesn’t necessarily herald the reopening of the painfully narrow IPO window for tech companies waiting to go public. That’s because its motivation for going public wasn’t strictly market-related.
ServiceTitan revealed that it needed to repay some of its venture investors quickly after it entered into painful terms with them when it previously raised funds. It said that in previous fundraisings, ServiceTitan agreed to pay increasing penalties to some investors, in the form of more shares, each quarter, as it delayed its IPO after May 22, 2024. The company revealed that they paid $84.57 per share, and according to Analysis from Meritech CapitalServiceTitan would have to go public at roughly $90 per share to avoid those penalties. In addition, the company also set aside about $311 million of its IPO funds to repurchase all shares of its non-convertible preferred stock, at $1,000 per share, which was the price those investors paid, in addition to paying them some huge dividends.
Although the IPO sales price of $71 was likely not enough to avoid penalties, it was actually healthy enough to meet a lot of ServiceTitan’s needs. It allowed the company to raise about $625 million — and possibly as much as $718.5 million if the bankers exercised their full option to buy all of their allocated shares. After a company pays its investors, it still has a large fund to use for operations, acquisitions, or other needs. ServiceTitan is still not profitable, so it needs cash.
But for retail investors raising stock prices on day one is an exciting omen nonetheless. Some react with excitement to it Thirst for this stock It could herald more IPOs soon. Others say this bodes particularly well for any fintech companies that have been waiting for their chance.
“We expect ServiceTitan’s debut to be an encouraging sign that could inspire other fintech players in the comprehensive fintech IPO pipeline to follow suit,” said Rudy Yang, senior emerging technology analyst at PitchBook.
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