Shares in the Wi-Fi networking company Ruckus Wireless Inc. (NYSE: RKUS) sank like stones Friday during the company’s trading debut on the New York Stock Exchange, which marked the first initial public offering by a U.S. company since the Nov. 6 general elections.
The tech firm priced the 8.4 million shares in its IPO at $15 apiece on Thursday, when Ruckus was valued at $126 million -- the top end of its expected range. At the time the company filed for the IPO last month, it valued itself at $100 million.
Shares of the Sunnyvale, Calif.-based company fell $2.75, or 18.33 percent, to $12.25 on Friday.
The past week and a half since the general elections have not been easy for businesses grappling with economic uncertainty and investor anxiety because of the looming U.S. fiscal cliff and Europe’s double-dip recession. The Wall Street Journal reported that five companies delayed their IPOs due to these concerns, leaving Ruckus as the sole barometer for many analysts and investors to employ while assessing the current state of the IPO market.
Selina Lo, the CEO and president of Ruckus Wireless, acknowledged the general economic uncertainty plaguing U.S. markets, but said that the company did not consider delaying its IPO.
“We have been preparing to go public for a long time,” Lo said. “For us, it’s not about a day, a week, or a month. It’s about the long-term growth of the company.”
“At the end of the day, it’s just one milestone,” Lo added. “As we went on the road show, we’ve run into one obstacle and another. First with Sandy, and then with the snowstorm last week, we had to swap a couple of the cities.”
Lo noted, “I think these are things that are going to happen out of our control,” and she pointed out that Ruckus was still able to attract strong support from “very high-quality investors” despite the hectic economic (and environmental) climate -- something that she attributes to the self-evident interest in and need for more robust Wi-Fi support for businesses.
“It is a period of uncertainty,” Lo said. “However, where we are focused with our smart Wi-Fi, the market for carrier-class Wi-Fi and enterprise Wi-Fi is totally secular. The appetite for wireless is so high, and people are now so dependent on Wi-Fi, that, no matter what, the market is going to exist. I don’t see people being able to cut back their wireless budgets.”
Overall, the S&P 500 Telecommunication Services Index dipped less than 1 percent Friday, while the major networking-equipment company Juniper Networks Inc. (NYSE: JNPR) dropped 58 cents, or 3.43 percent, to $16.32.
Lo acknowledged the decline, but insisted that the drop Friday only mirrored the larger trend, saying the “macro environment will obviously impact the general ecosystem, but I think that our business is solid.”
Before its IPO, Ruckus enjoyed the kind of fast-paced growth that tends to lure investors and spark speculation about going public. In the first half of this year alone, it nearly doubled its revenue to $93.9 million. Its annual revenue had already increased from $44 million in 2009 to $120 million in 2011 -- the first year Ruckus turned a profit with $4.2 million after posting losses the two previous years. Total revenue for the first nine months of this year jumped to $153 million, a 93 percent increase over the year-earlier period.
According to Lo, “There’s really no need to pull back for us.”