Social media technology provider Sprout Social Inc. saw its shares slide more than 3% on the Nasdaq stock exchange today after closing a $150 million initial public offering last night, signaling that the IPO market will likely continue to remain complicated for tech firms in 2020.

The company sold 8.8 million shares at $17 apiece late Thursday, hitting the midpoint of the target range. Sprout Social’s underwriters have the option to buy another 1.3 million shares. The company received a valuation of $984 million in the IPO and climbed more than 1% during early trading, passing $18 per share, but has since dropped below the original $17 listing price.

Chicago-based Sprout Social is the first tech firm from the Windy City to have gone public in five years. It sells a cloud-based platform that companies use to publish content across their social media pages, analyze the performance of posts and tune in to what customers are talking about. In August, Sprout Social added a new tool that provides the ability to centrally monitor a business’ reviews across Facebook, Google My Business and TripAdvisor.

Sprout Social has more than 23,000 customers that use its platform to manage 420,000-plus social media pages. The company’s IPO filing showed that sales climbed 32% in the nine months ended Sept. 30, to $74.6 million, and the third quarter saw annualized recurring revenue hit $100 million for the first time.

But though a 32% top-line gain can certainly be considered healthy, it’s less than the 54% Sprout Social recorded at the end of 2018. That may have been one reason investors weren’t quick to buy up the stock this morning.

Sprout Social has never turned a profit. The company incurred a loss of $21.9 million in the nine months ended Sept. 30, which is more than the $17 million it posted for the prior-year period, but the figure represents an improvement when measured as a percentage of  revenue. Asked about his plans for profitability in an interview this morning, Sprout Social Chief Executive Officer Justyn Howard said that “we’re gonna continue to invest in growth … while maintaining a very healthy financial profile.”

Sprout Social’s trading debut comes a day after business-to-business payments specialist Bill.com Inc. listed on the New York Stock Exchange. The company received a warm reception from Wall Street, surging 61% in trading after an IPO that netted $216 million. 

Photo: Nasdaq