Astera Labs started out as a public company trading at $52.56 per share and was up 46% when the bell rang. The company last night priced its IPO at $36 per share, above its upward price range. Astera’s debut marks the first materials technology product TechCrunch is tracking this year. Reddit, a well-known social forum and provider of artificial intelligence data, is expected to price the shares after the close today and begin making the saga public tomorrow.
Astera Labs makes connectivity hardware for cloud computing data centers. Astera’s revenue has grown significantly recently as artificial intelligence is required to move vast amounts of data in, out and around data centers. After achieving revenue of $79.9 million in 2022, revenue will grow 45% to $115.8 million in 2023.
Astera’s share price has continued to climb since trading began, reaching $55.73 at the time of writing, a gain of approximately 54%. While the company’s strong early trading is sure to draw criticism that it’s mispriced and that the company is leaving money on the table, its bull run into public life may help other private market tech companies find courage after a period of List your own stocks. IPO activity has been limited for a long time.
Astera Labs’ IPO valuation is about $5.5 billion, which would rise to about $8.9 billion at current trading prices. The fully diluted valuation number was higher, but importantly for the company, it priced its IPO beyond the final private placement price and then immediately beat the latter.
quiet victor
While the buzz surrounding Astera Labs’ public offering was notably less than that surrounding the Reddit IPO, there’s reason to believe it’s more of a test of market demand for AI stocks than Reddit’s own IPO; while Reddit The data business based on artificial intelligence is undoubtedly a growing proportion of its business, but according to TechCrunch’s analysis, it will still only account for a single-digit percentage in 2023 expectations.
In contrast, AI-led data center construction has benefited Astera Labs, accounting for a larger portion of what the market may consider its current size and future growth. The fact that the company is growing as fast as it did in the fourth quarter of 2023, the quarter it managed to swing from a loss to a GAAP profit, underscores the idea that the company is a growing company due to artificial intelligence demand. company. Although this is far from the more compelling basic model work being done by OpenAI and its competitors.
“They’re not an artificial intelligence company. But I think they will definitely benefit from this trend,” said Nick Einhorn, vice president of research at Renaissance Capital, a firm that tracks the IPO market and offers publicly traded ETFs. “I think when you see revenue growth, I think the most recent quarter is really the most compelling argument for them.”
Astera’s debut may also be a better gauge of the performance of this year’s venture-backed IPOs. While Reddit is also backed by venture capital, it has some unique financial history, including acquisitions and spinoffs. Astera Lab, on the other hand, was founded in 2017 and has raised $206 million in venture capital and was last valued at $3.1 billion, making it a better competitor to other companies on the radar, including Databricks, Stripe, and Plaid.
Next up is Reddit
Astera’s stock’s final closing price could provide a positive sign for the AI hardware company, but it could also spark IPO buzz for Reddit’s own listing. If Astera stumbles out of the gate, Reddit may find itself hurt before it even starts trading.
Instead, Astera posted first-day trading results for 2021 – perhaps Reddit could follow suit?
Astera’s strong performance as a public company in its first few hours could also improve some of the investor activity that has hampered or even prevented some public offerings altogether. As TechCrunch reported earlier this week, some late-stage startups may not be able to go public at a lower price than their last major valuation due to equity deal terms, including dilution — even if founders are willing to go for a lower price Access the open market. Give investors the right to block transactions.
If venture capitalists had known that this new startup might be as popular on the public markets as Astera Labs, maybe they would have viewed the timeline differently.
