Pure Storage shares plunged more than 5 percent from the flash data storage company s initial public offering price of $17 in an IPO that was valued at $425 million.
Mountain View-based Pure Storage was viewed by some observers as a key player in helping to re-ignite the market for technology IPOs.
But after pricing the IPO at $17, the shares traded at about $16 in mid-session action.
Pure Storage is trading on the NYSE under ticker symbol PSTG.
For the fiscal year that ended in January, Pure Storage lost $183.2 million on revenue of $174.4, according to a regulatory filing with the Securities and Exchange Commission.
Revenue appears to be increasing dramatically, however. For the six months that ended in July, Pure Storage produced revenue of $158.7 million, although the company lost $113 million.
Pure Storage appears to be the fastest growing company in the history of the storage industry, according to an analysis posted by Renaissance Capital, which tracks the IPO market.
The Renaissance report determined that Pure Storage took three years since its product launch to reach at least $200 million in revenue. That s the same number of years that it took Riverbed Networks to reach at least the $200 million mark.
Over the 12 months that ended in July, Pure Storage booked $274 million in revenue, according to Renaissance. Pure Storage is expected, by the end of this calendar year, to top $300 million in revenue, Renaissance estimated. Riverbed wound up with $236 million in revenue in its third year, which was in 2007.
An array of risk factors imperil Pure Storage s prospects, however. The company notes that it has grown rapidly, but might not be able to maintain or properly manage that growth.
As of January 2015, Pure Storage employed more than 800 workers. That s more than double, or a 129 percent increase over the 350-employee headcount in January 2014, the SEC filing shows.
Investors shouldn t expect a profit any time soon, the prospectus warned. And that s a deliberate calculation by Pure Storage.
Our strategy is to increase our investments in marketing, sales, support and research and development at the expense of near-term profitability, Riverbed stated in the SEC filing. We believe our decision to continue investing heavily in our business will be critical to our future success. We anticipate that our operating costs and expenses will increase substantially for the foreseeable future.
The arena that Pure Storage seeks to disrupt is filled with stalwart rivals.
We face intense competition from a number of established companies that sell competitive storage products, Pure Storage stated in the filing. These competitors include Dell, EMC, HP, Hitachi Data Systems, IBM, Lenovo and NetApp.
Despite the hazards, Pure Storage aims to revolutionize the storage business by using flash memory systems as the foundation for its storage technology, rather than the legacy disk-based systems.
Our mission is to deliver data storage that transforms business through a dramatic increase in performance and reduction in complexity and costs, the company stated in the filing.
Pure Storage has filed for a $425 million IPO.
Image credit: Pure Storage prospectus of Sept. 24, 2015
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