On March 12, 2013, Silver Spring Networks (NYSE:SSNI) raised $81M by offering 4,750,000 shares at $17 on its successful IPO. Goldman Sachs and Credit Suisse acted as lead managers on the deal. On Monday, September 9, 2013, as disclosed in the prospectus, 40,648,561 shares will be available for sale in the public market subject to customary restrictions. The unlocking of these many shares provides investors with a short opportunity because the potential sellers could change the supply/demand dynamics on this stock in the near term.
The major holders of the 40,648,561 shares include the executive officers and five different venture capital firms and private equity investors. The five are Foundation Capital, Kleiner Perkins Caufield & Byers, NCD Investors, WR Holdings and Contra Costa Capital. These executives and investment firms may have a variety of reasons why they may choose to sell or retain their shares, but in all likelihood some of them may seek liquidity.
Silver Spring Networks designs IPv6 networking for "smart meters" - devices designed to track electricity consumption in homes and businesses and to communicate that information to utility companies in near-real time. Real-time reporting offers utility companies the opportunity to finally match electricity consumption with production, a long-sought holy grail in the energy industry. The technology is still relatively young, and few utilities have instituted the systems, indicating significant opportunities for growth. Silver Spring has already scored contracts with utilities like CPS Energy, Baltimore Gas & Electric, and Florida Power and Light, among many others.
In its first day of trading on March 13, 2013, SSNI struck a rare success in the world of clean tech IPOs, which many investors consider hazardous. The smart metering company's stock jumped 29 percent, clambering its way from an offering price of $17 to a final price of $22 by day's end. The company has continued to do well, and Silver Spring's August reports underlined a 17% year-over-year increase in revenue to a figure of $86.5 million. Though the limited big-prize contract format of the smart metering market can at times cause unpredictable leaps and falls in its price, the company's history in the industry and the rapid growth of the industry in general render it an extremely interesting company.
Founded in 2002, the company is now over a decade old and appears to have developed sufficient stability and flexibility to remain poised to seize opportunities in the smart metering field, with assets that include approximately $125 million in cash. The company has continued to add to its executive core, the most recent addition being Jim Burns as Executive Vice President and CFO. Burns is coming off of a 24-year stint with Hewlett-Packard (NYSE:HPQ), and his announcement of his new position with Silver Spring contained a tantalizing mention of his excitement to "extend our technology to new adjacent markets."
Silver Spring is hardly the only game in town when it comes to smart metering, and the limited nature of available projects could also be partially responsible for the volatility of SSNI stock; for immediate instance, the U.K. government's recent announcement that Silver Spring was not amongst the "preferred bidders" for some £11.5 billion worth of new smart metering contracts left investor confidence reeling. Other major players in the field include Itron, Inc. (NASDAQ:ITRI), Echelon Corporation (NASDAQ:ELON), and Telefonica S.A. (NYSE:TEF).
Disclosure: I am short SSNI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.