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No IPO Pop for Pure Storage in $425 Million NYSE Debut

Shares fall as much as 6 percent on the first day of trading.

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Shares of Pure Storage, the enterprise company devoted to using flash memory technology to store corporate data, fell on their first day of trading on the New York Stock Exchange.

Having priced Tuesday night at $17 a share, the offering valued Pure at nearly $3.2 billion. The shares opened for trading at $16.74 and fell as much as 6 percent to as low as $16.00 as of 11:30 am PT and later closed at $16.01.

Pure raised about $425 million in the offering. But the decline on its opening day may give pause to other companies mulling an IPO in the coming months. Pure was the largest venture-capital-backed offering of the year, having raised $470 million from VC firms including Greylock Partners, Redpoint Ventures and Index Ventures. So far this year at least 47 companies have withdrawn plans to go public, according to data gathered by Renaissance Capital.

In an interview with CNBC, CEO Scott Dietzen said he was encouraging his company to “think long term” and not worry about short-term results. (See video below.)

Pure is the third company emphasizing flash memory in the data center to go public in recent memory. The other two were Fusion-io, now a unit of SanDisk, which debuted in 2011, and Violin Memory, which floated in 2013. Both offerings faltered.

There’s no argument that Pure is growing fast. It closed the first half of its 2015 fiscal year on July 31 with revenue of nearly $159 million, up 171 percent from the prior year’s period. It posted a net loss for the period of nearly $113 million, up 18 percent from the prior year. Combined operating expenses rose from $126.5 million to north of $205 million, led by sales and marketing costs, which rose by 51 percent.

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