Shares of Amplitude Inc. popped significantly above their reference price Tuesday after the software company made its public debut through a direct listing.
shares opened at $50, 43% above the $35 reference price set by the Nasdaq, and then headed higher from there to a recent $54.17. Because the company didn’t hold a traditional initial public offering, it didn’t raise money in the process of going public.
Chief Executive Spenser Skates called traditional IPOs “antiquated” in an interview with MarketWatch, arguing that companies who go that route often end up underpricing their shares. Skates said that Amplitude is “very well set up for the future” with the cash it currently has, which can be used for future investments in the business.
Amplitude makes software that helps businesses conduct what the company calls “digital optimization.” Businesses with digital footprints have complex apps and platforms and have become increasingly interested in finding out more about consumer behavior across their online enterprises, according to Skates. The goal is to provide useful information about “what features people are using, what they like, and where they get stuck,” among other things, he continued.
One Amplitude client, Peloton Interactive Inc.
used the company’s tools to help determine that customers are more likely to engage in future workouts if they’ve been involved in social interactions through the Peloton platform, Skates said. This prompted the exercise company to bake more social features into its product. He also gave the example of meditation app Calm, which used Amplitude to pinpoint strong customer interest in regular reminders about mindfulness and then reorient its app to feature reminders more prominently.
Skates argued that Amplitude’s software provides a “Moneyball-like approach for apps and websites in the same way that baseball got totally transformed by data and statistics.”
The company generated $72.4 million in revenue during the first six months of 2021, up from $46.0 million in the first six months of 2020. Amplitude posted a net loss of $16.5 million for the first six months of 2021, nearly even with its loss of $16.6 million in the first six months of 2020.
Skates said that Amplitude has focused on being “very efficient as a business” but that the company would also continue to invest in growth opportunities as he views the market for digital-optimization technology as relatively nascent. Amplitude works with 26 companies in the Fortune 100 and Skates sees room to expand its relationships with current customers as well as to pick up new clients.
Amplitude is not the only company conducting a direct listing this week. Warby Parker, the company known for its affordable eyeglasses sold online, is planning a direct listing on Wednesday at an estimated market value of nearly $3 billion, according to Renaissance Capital, a provider of institutional research and IPO exchange traded funds.
The IPO calendar is relatively quiet this week with just four other deals on tap from hair care brand Olaplex Holdings , Singapore-based tech services provider TDCX
investment-management software company Allvue Systems Holdings
and First Watch Restaurant Group
Amplitude’s direct listing comes as the Renaissance IPO ETF
has risen 25% over the past 12 months as the S&P 500
has gained 30%.