Shares in web caching appliance maker CacheFlow jumped more than fivefold Friday following their long-anticipated initial public offering. The Sunnyvale, California-based company raised $132m, selling 5.5 million shares at $24 each – well above its initial expected price range of just $11 to $13. The shares opened at $113 and traded as high as $139.25 before closing at $126.375 – for a 426% gain on the day. Total volume for the session was 7.3 million shares.
Ahead of the offering, CacheFlow had upped its expected price range to $18 to $20, but priced the shares well above even that as interest in the offering grew. Investors are betting that the company’s products, which effectively improve the speed of information moving over the internet, will meet with strong demand going forward.
The 126-person company lost $13.2m last year on revenue of $7.0m. Still, it now has a market capitalization of about $4bn based on Friday’s closing price. Morgan Stanley Dean Witter acted as lead underwriter for the offering, with Credit Suisse First Boston and Dain Rauscher Wessels also in on the deal.
