On March 31, a small tech company from Palo Alto, California, filed for its initial public offering.
It could be the latest in a string of IPO winners. Just consider the initial performance of three tech stocks’ IPOs:
All three of these companies have gone public within the last two months!
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The Wall Street Journal reports that there are 152 private companies valued at more than $1 billion. These companies have raised venture capital financing, and could be secretly preparing to IPO.
The next in the IPO lineup is a company called Cloudera.
It’s a “big data” company that plans to raise $200 million in its stock offering.
So, what exactly is big data?
Well, we live in an information world of the internet, iPhones, social media and self-driving cars.
The world is rapidly changing. More devices mean that there is lots more data to track, analyze and visualize.
That’s what Cloudera does. It helps its business clients make sense of vast amounts of data.
For example, MasterCard uses Cloudera to identify fraudulent merchants. And Nokia uses the technology to understand how people interact with their mobile phones.
It’s not surprising that business is booming. Cloudera’s revenues jumped 57% last year.
Big data is big business. The market is expected to grow to $203 billion within three years.
That’s why Silicon Valley’s top investors have been placing big bets on promising young tech companies.
Top investors in Cloudera include Accel Partners and Greylock Partners.
A couple years ago, Intel (NASDAQ: INTC) bought a stake for $740 million
Why? Because the chip maker is convinced that data analytics is going to be huge.
For the fiscal year ending Jan. 31, 2017, Cloudera revenues totaled $261 million. That was a 57% increase from the previous year.
Like many tech companies, Cloudera is still losing money. Last year, the losses totaled $124 million (versus $95 million one year earlier).
Those losses can be scary. But they’re pretty common for tech companies that are experiencing rapid growth.
The good news is that Cloudera is well funded. The company has $256 million in cash and plans to raise $200 million in the IPO.
Access your pre-IPO shares in Cloudera ̶ BEFORE the Cloudera IPO in May 2017 (click here to learn how).
What’s the Cloudera IPO Price?
Cloudera and its underwriters have not yet released an IPO price.
Intel invested at $30.92 a share back in 2014. There is speculation that the IPO price will be below that level.
As of December, the private market for Cloudera reflected a current value of $17 to $26 per share. More recently, Cloudera was granting stock to employees at $17.85 per share.
My estimate would be that the Cloudera IPO is in the range of $18 to $20 per share. Of course, we’ll know a lot more in the coming weeks.
I don’t like to buy IPOs when they start trading on the market. They can be extremely volatile in their first few days of trading. And often, the media hype overshadows the true business fundamentals.
Instead, I prefer to invest in pre-IPO shares. That means buying shares of Cloudera and other promising tech companies months and years BEFORE they IPO.
That’s because early investors always earn the biggest profits. Instead of BUYING shares when insiders are SELLING… I’d prefer to invest ALONGSIDE the insiders.
Usually, these deals are off-limits to 97% of investors. But using a secret loophole, ANY investor can access these pre-IPO shares.
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One more thing:
Earlier, I mentioned a venture capital firm called Accel Partners.
Back in 2014, Accel paid just $0.39 per share to invest in Cloudera. The total investment was $5 million.
If Cloudera shares price at at $18 (the low end of my estimate) in the IPO, they’ll make a 45-times return on their investment.
That means the $5 million investment could be valued at $225 million.