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HashiCorp shares rise slightly after IPO values cloud infrastructure company at over $14 billion

HashiCorp at the Nasdaq market site, December 9, 2021.

Source: Nasdaq

Shares of HashiCorp, a company whose software helps engineers set up computing infrastructure in public clouds and on-premises data centers, debuted on the Nasdaq on Wednesday under the symbol “HCP.”

Shares rose more than 7% after its debut.

The stock started trading at $81.16 per share, up from the $80 price at which it sold shares in an initial public offering. HashiCorp is valued at about $14.3 billion at an $80 share price.

It’s one of more than 100 technology companies that have become available to investors on U.S. exchanges this year, as businesses evolved to operate efficiently during the Covid pandemic.

But HashiCorp’s debut comes as some investors have reduced their exposure to cloud stocks. The WisdomTree Cloud Computing Fund sold off nearly 11% last week, compared with a 1% decline in the S&P 500 index. The selling came as Moderna CEO Stephane Bancel said vaccines might be less effective at handling the omicron virus variant than previous variants, and Federal Reserve Chairman Jerome Powell talked about slowing the pace of bond purchases.

Some companies provide higher ranges after announcing an initial one in the run-up to IPOs, but HashiCorp didn’t do that.

Still, HashiCorp said Wednesday that it sold 15.3 million shares of stock at $80 each, above the estimated range of $68 to $72 that it announced on Nov. 29, netting $1.22 billion from the IPO. The company filed its prospectus on Nov. 4.

Mitchell Hashimoto, the company’s founder and its chief technology officer until earlier this year, owns shares worth $1.2 billion at the IPO price. Armon Dadgar, the co-founder and current CTO, owns a stake worth $1.5 billion.

HashiCorp grew on the increasing popularity of its open-source tools such as Terraform, for setting up infrastructure, and Vault for managing passwords. The company offers self-serve cloud implementations of those tools, and a sales team works to make deals at large companies, including with licensed software for use in data centers.

Over 97% of revenue comes from subscriptions, but just 7% comes from cloud-based services, even though the cloud services revenue is growing much faster than license and support revenue.

HashiCorp’s investors include GGV Capital, Mayfield, Redpoint and True Ventures. The IPO’s top underwriters were Morgan StanleyGoldman Sachs and JPMorgan.

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