Splunk, Shareholders Stiffed Again

Big data firm Splunk Inc. (NASDAQ: SPLK) had one of the most successful IPOs of this year, if you measure success by the rise in the share price on the first day of the offering. Splunk shares went out at $17 and closed at more than $35. We made the point shortly after the IPO that the company was not well-served by its underwriters.

This morning the company announced a secondary offering of 11.74 million shares at $28.25 per share, a discount of about 3.2% to last night’s closing price. The underwriters have a 30-day overallotment option on another 1.76 million shares. All the shares included in the sale are being offered by existing shareholders, and all the proceeds from the offering will go to those shareholders.

According to Splunk:

As part of the offering, all selling stockholders have agreed to lock-up agreements that will extend the initial public offering lock-up period on 50% of their shares until 180 days after this offering.

That’s nice. But these sellers made out like bandits. The company got $17 a share because the underwriters mispriced the IPO. Then just a few months later, Splunk’s venture firms, company executives and underwriters sell their shares for $28.25. Pretty sweet deal.

Splunk’s shares were down 0.65% in premarket trading this morning, at $29.00 in a post-IPO range of $25.15 to $37.57.

Paul Ausick