Splunk Splurges on IPO.

By: Joe Womberman

Splunk (SPLK), the network analysis tool provider splurged forward on its IPO. The San Fran based company sold shares at $17 apiece, raising $229. 5 million; valuing the company at $1.57 billion. On April 16, Splunk increased the proposed price range for its IPO to $11 to $13 apiece, from a prior target of $8 to $10.

The shares have continued to rise throughout the day, ending on its high at over a 108% increase on the day, at $35.48, leaving the current valuation at over $3 billion. A significant premium over one of its key competitor’s ArcSight that sold to HP for a mere $1.5 billion, less than 12 months ago.

The key difference between the two companies is the markets current infatuation with so called "Big Data". Splunk provides software that helps businesses monitor and analyse data via indexing to improve service, reduce operations costs and identify security risks.

Splunks revenue for the last fiscal year was only $121 million, meaning its current share price is some 25 times revenue, which would be it in the top leagues of Nasdaq valuations. Add to that, Splunk lost close to $11 million.

Can it sustain these levels of valuations? Time will tell.

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