The automaker of electric vehicles Rivian Automotive, which generates virtually no income, made headlines this week after raising over $12 billion in its initial public offering and then seeing its market valuation soar past $105 billion, surpassing Ford.
Likewise General Motors in the process, Backblaze was at the other extreme of the IPO market, a cloud storage platform for data backup.
Backblaze is a throwback to a time when sub-billion-dollar enterprises commonly went public to acquire funds and boost their profile in an effort to gain customers’ trust in an era of blockbuster market debuts followed by stratospheric private fundraising rounds.
Backblaze’s revenue for the year ended June 30 was $59.9 million, with second-quarter sales increasing by nearly 17% to $16.2 million according to the company’s prospectus.
Backblaze is valued between $428.2 million and $485.3 million at its IPO price range and with 28,545,893 projected to remain outstanding after the IPO. The company’s fully diluted valuation is noticeably much higher. According to Renaissance Capital, at $16 per share, Backblaze is valued at $644 million, inclusive of shares that have already been earned but have not yet been converted into shares through the exercise of options or other similar means.
The storage company might be valued at $684.3 million by Backblaze’s IPO, according to a quick extrapolation of its pricing range.
As a non-unicorn, Backblaze is now going public. This is noteworthy given the size and number of IT companies that have just gone public. Indeed, even some of the more unconventional or smaller businesses that have made their debut in recent quarters have valuations that are beyond $1 billion.
The following instances come to mind: AllBirds, NerdWallet, and Coinbase were all worth several billion dollars when they went public. Robinhood was valued at dozens of billions of dollars when it went public. Similar to AllUnicorn. You see what I mean.
Less than one-twentieth the amount funded this year by businesses like GlobalFoundries, Robinhood, and Bumble, Backblaze raised only $100 million in its IPO. Backblaze’s stock price increased to $22.31 after rising 24% in its debut on Thursday and another 12% on Friday, giving the business a market valuation of over $650 million.
This year, more than 100 technology businesses were listed on American exchanges, and Backblaze is a micro-cap company by comparison to its competitors. At least 21 tech startups expected to launch in 2021 are valued at above $10 billion. Roblox is valued at over $50 billion, Affirm at over $40 billion, and Coinbase at over $70 billion.
But Amazon was making $16 million in revenue every quarter when it went public in 1997. It was still typical for tech businesses to go public with valuations below $1 billion up until around a decade ago when the private markets began to balloon with new entries.
In a very competitive industry that includes the largest cloud services in the world from Amazon, Microsoft, and Google, Backblaze leaders had other reasons to go public. Currently, Backblaze has half a million paying subscribers and stores two exabytes of data or 2 million terabytes.
According to Budman, Backblaze’s IPO offered a clear opportunity to show clients its financial records and demonstrate that the business is prepared to serve as a long-term technology provider.
He claimed that the additional funding would aid the business in growing its sales staff as it competes with established leaders in the field. In the second quarter, its B2 business—which competes with Amazon’s S3 cloud storage service—grew by 61%.
I truly hope that by demonstrating that this is feasible for a mid-market company, we pave the way for other businesses to follow suit, said Budman. “In the past, enterprises of different sizes would go public. People may have delayed more and longer out of fear, in my opinion.
FAQs
Ans. Because of the IPO proceeds, we now have additional money to invest in the growth of our Storage Cloud platform and the B2 Cloud Storage and Computer Backup services it supports.
Ans. Privately held businesses make up Rivian. Shares of Rivian cannot be purchased on the open market. You may be able to invest at the IPO or buy pre-IPO shares, but you’ll need to meet certain conditions and there might be limitations. It’s possible that these shares won’t exist at all.
Ans. In the past year, Backblaze has received “buy,” “hold,” and “sell” ratings from 6 Wall Street analysts. For the stock, there are now 6 buy ratings. Wall Street experts are in agreement that investors should “buy” BLZE shares. View recommended stocks or examine analyst ratings for BLZE.
Ans. Backblaze generated $59.9 million in revenue for the year ended June 30.
Ans. Backblaze is valued between $428.2 million and $485.3 million at its IPO price range.
Ans. Backblaze raised $100 million in its IPO.
Ans. Backblaze stores two exabytes of data, which is equivalent to 2 million terabytes.
Ans. Backblaze’s B2 business provides similar cloud storage services as Amazon’s S3, offering competition in the market.
