Dell-owned SecureWorks’ IPO falls below expectations

22 Apr 2016

As the dust settles on the IPO of the Dell-owned cybersecurity firm SecureWorks, it’s become clear that it has failed to live up to its own expectations in terms of share price and the number of shares sold.

The appearance of the SecureWorks IPO was welcomed by many within the tech and financial sectors, largely due to the obvious lack of IPOs held by tech companies spanning a period of four months, something which hasn’t happened since 2009.

Ahead of its IPO, Dell had set a target of selling 9m shares at price of between $15.50 and $17.50 per share but, according to the Wall Street Journal, this was overoptimistic from the tech giant.

In reality, SecureWorks managed to generate the sale of 8m shares of the company at a price of $14 each, raising $112m in the process.

Potential investors not impressed by losses

Given the dearth of IPOs, analysts were unsurprisingly hoping to see the SecureWorks IPO prove to be a success that could spur on further IPOs in the months to come, but perhaps SecureWorks was not the best example to lead given scepticism that preceded its IPO.

During presentations to potential investors, the company appeared to encounter criticisms of its ability to be good at returning a profit, as well as similar criticisms being thrown towards some of its rival cybersecurity firms.

In its prospectus, SecureWorks revealed that it had almost doubled its net losses in 2016, having lost $72.4m at this stage, having recorded $38.5m a year earlier.

Speaking with the Wall Street Journal, portfolio analyst for Columbia Threadline Investments, Israel Hernandez, appeared to suggest bubble-like behaviour when it came to previous investments in cybersecurity companies as investors getting “overly excited”.

SecureWorks image via Dell OEM/Flickr

Colm Gorey was a senior journalist with Silicon Republic