Navan, the corporate travel and spending platform, ended its first day of trading on the Nasdaq on Thursday 20% below its $25 IPO price, giving the 10-year-old company a valuation of about $4.7 billion.
The company was the first to use a new SEC rule that allows public listings during government shutdowns.
Unlike the traditional IPO route, which requires review and final approval by SEC regulators, companies using the shutdown workaround can automatically receive approval for their IPO documents 20 days after submitting their price range, effectively avoiding the need for manual SEC approval.
Navan IPO tumbles
But the updated process carries a risk: the government could scrutinize the documents later. If the SEC later finds material deficiencies or undisclosed issues, the company may be forced to amend its statements, leading to lower stock prices and even potential lawsuits.
Despite these risks, Navan decided to go ahead with its IPO, primarily because SEC staff had already reviewed most of its registration statements before the government shutdown began on Oct. 1.
The stock’s initial decline is likely at least partially influenced by this regulatory uncertainty.
Market reaction to Navan’s offer is being closely watched by other IPO contenders. Startups looking to go public before the end of the year will have to decide soon whether they’re ready to deal with regulatory unknowns or delay their filings until next year.
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Navan has been waiting to go public for several years. The company reportedly filed its confidential IPO papers in 2022 and planned to debut in early 2023 at a $12 billion valuation.
The company, formerly known as TripActions, was valued at $9.2 billion when it raised a $154 million Series G round in October 2022.
Navan IPO tumbles
New customers include Shopify, Zoom, Wayfair, OpenAI, and Thomson Reuters. The company claims that its AI-powered assistant, Ava, handles about 50% of customer conversations related to booking or modifying flight, hotel and car rental reservations. Navan’s expense management solution helps companies manage employee expenses through features like automated receipt scanning and categorization.
The company generated $613 million in revenue over the past 12 months (up 32%), with a loss of $188 million, according to of S1.
Navan’s largest venture capital backers prior “Navan IPO tumbles” to the IPO included Lightspeed (24.8% stake), solo VC Oren Ziv (18.6% stake), Andreessen Horowitz (12.6%), and Greenocks (7.1%).