Big data, big market cap

After its IPO, Hortonworks is a $1 billion Hadoop company (again)

Shares for Hadoop vendor [company]Hortonworks[/company] finished their first day of trading at $26.48, up from $16 when the company priced its initial public offering on Thursday night and Friday’s opening bid of $24. The company’s total market cap is $1.1 billion at the close of trading Friday, matching the $1.1 billion valuation at which the company raised its last round of venture capital.

Hortonworks IPO day stock chart

There were a lot of questions and speculation heading into Friday’s IPO, fueled by Hortonworks’ lackluster revenue and profit numbers on one hand, and excitement over the Hadoop marketplace on the other. There’s a general belief among information technology types that Hadoop will be ubiquitous in time, the backbone of data architectures for decades to come, but it’s still a cash-intensive business for companies selling it.

Some felt that prospect could scare off public market investors, who are used to software companies with nice, fat margins. It’s especially true for Hortonworks, which offers only open source software and makes its money on support and services. Hortonworks was founded and launched in 2011, after a group of engineers spun the company out from Yahoo, which had been driving much of the work on the open source Apache Hadoop project. But the stock rallied late in a trading day that was awful for most major stocks.

No doubt Cloudera and MapR, Hortonworks’ two largest rivals in the pure-play Hadoop space, will be watching the company’s stock closely over the coming months. MapR also claims a private-market valuation of more than $1 billion, while Cloudera’s valuation is more than $4 billion. If Hortonworks’ stock can maintain steady performance, it might inspire the company’s competitors to test the market for their Hadoop business that are fueled largely by software licenses.