Snapchat Actually Isn’t the Hottest IPO This Year

March 30, 2017, 5:58 PM UTC

For all the hype around Snapchat, the so-called hottest IPO of 2017 may have already lost its title to a little-known underdog. That dark horse is a former unicorn software company hoping to be the next Salesforce: MuleSoft.

Snapchat’s parent company Snap (SNAP) had a roaring start in the public markets, surging 44% in its first day of trading in early March to what is now a $25 billion market capitalization. And while the social media company won disapproval from some Wall Street firms and the attention of short-sellers, it still managed to end the first quarter of 2017 up 32.6% since its initial public offering.

That could have made Snap the hottest IPO of 2017 so far, judging by its first day pop alone. And according to Renaissance Capital, Snap would have also been the fourth most lucrative out of the 25 companies that made their public debut in the first quarter of 2017. But MuleSoft (MULE) has actually beaten Snap to the crown on both fronts.

MuleSoft helps companies tie their disparate technologies and data sources together, and counts Coca-Cola, StubHub, and Citrix among its clients. Like Snap, MuleSoft debuted on the New York Stock Exchange, but 15 days later. And again like Snap, MuleSoft also priced its shares at $17, above its anticipated $14-16 range. But that’s where the story diverges. Not only did investors send the stock up higher than Snap on its first day of trading — it jumped 45.6% that day — it has also brought investors higher returns than Snap since each of the companies’ respective IPOs, according to Renaissance Capital. MuleSoft shares have risen 40% since the IPO, about 7.4 percentage points higher than Snap’s rise since it went public.

MuleSoft has enjoyed a steeper rise partly because it has a much smaller number of shares available for trading on the open markets. While Snap’s stock price, $22 a share as of Thursday afternoon, is determined by the daily movement of some 245.3 million shares available for trading, MuleSoft’s price, $23 as of Thursday afternoon, fluctuates based on only 13 million shares available. That’s makes MuleSoft’s stock price much more reactive to buying and selling, and theoretically more volatile.

But another main measure of how “hot” an IPO is gives Snap the clear advantage. While Snapchat grew to a giant $25 billion market capitalization after its IPO, making the company a large-cap stock, MuleSoft grew to just $3.1 billion, leaving it at the lower end of the mid-cap spectrum.

And at least from a a price-to-sales perspective, with neither company reporting a profit in 2016, MuleSoft is a whole lot cheaper and less in demand. Based on MuleSoft’s 2016 revenue and current market capitalization, investors are in theory willing to pay some $16 per dollar of revenue. Snap’s investors, by contrast, have crowded into the stock so much that they are willing to spend $62 per dollar of revenue.

But if we’re just judging an IPO’s “hotness” by its returns in the first quarter, that honor goes to biotech company AnapytsBio, with a market cap of about $595 million as of Thursday afternoon. That stock has surged 89.5% in the first quarter since its IPO on Jan. 25.

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