Boston Globe / Getty Contributor
- Klaviyo stock soared on its debut Wednesday, within days of Instacart and Arm's initial public offerings.
- The software company priced 19.2 million shares at $30 each, valuing the company at over $9 billion.
- Shares rallied as much as 23% after trading began, but later pared gains.
Klaviyo stock rallied as much as 23% after it debuted on Wednesday, following Instacart's splashy IPO on Tuesday as well as Softbank-backed Arm's launch last week.
The software company, founded in 2012, priced 19.2 million shares on Tuesday at $30 each, giving Klaviyo about a $9 billion valuation, fully diluted.
Shares pared gains and later changed hands at $34.50, about 15% higher from its IPO price. It is listed under the ticker "KVYO" on the New York Stock Exchange.
Klaviyo helps companies build user profiles for targeted marketing. It started in the e-commerce sector, and has since expanded into various marketing channels for businesses across events, travel, and entertainment.
Revenue grew of 51% in the latest quarter to $164.6 million, helping the bottom line swing to net income of $10.9 million.
In 2021, Klaviyo had been valued at about $9.5 billion in private markets. That's slightly less than Instacart, which debuted Tuesday with a $10.2 billion valuation — about a quarter of the $39 billion seen during the pandemic — and Arm's $54.5 billion.
Venture capitalists and Wall Street experts are cautiously optimistic about what the recent slate of companies going public could mean for the IPO market, which has been stuck in a pandemic hangover for the better part of two years. In 2020 and 2021, scores of companies initiated IPOs, but many now trade below their IPO price.
Wharton senior fellow David Erickson said the current, muted landscape is reminiscent of the years following the dot-com bust.
"What we had in 2020 and 2021 was very emblematic of what we saw back then," Erickson told Insider in a recent interview. "There was so much excitement around growth companies, and the market got carried away. After 2000, it took years before IPOs came back, and now we're kind of at that period too."
And Rachel Gerring, EY Americas IPO Leader, told Insider on Tuesday that even if the recent names prove successful and well-received by the market, that doesn't mean the floodgates will open for other companies looking to do the same.
Still, she said the likes of Arm, Instacart, and Klaviyo offer a "good litmus test" for what's to come in 2024.
"These are companies that are largely profitable, scaled, and have name recognition, collectively they are fitting what investors are looking for in this more risk-averse environment," Gerring said. "It's a nice, predictable way for a market reopening to occur."