Corporate travel and expense platform Navan closed its first day of trading on the Nasdaq Thursday down 20% from its $25 IPO price, valuing the 10-year-old company at about $4.7 billion.
The company is the first to apply new SEC rules that allow it to go public during the government shutdown.
Unlike the traditional IPO path, which requires review and final approval by SEC regulators, companies using the Shutdown Workaround can receive automatic approval of their IPO documents 20 days after submitting their price range, effectively avoiding the need for manual SEC approval.
However, the updated mechanism comes with risks. This is because the government may scrutinize the documents later. If the SEC subsequently discovers significant flaws or undisclosed issues, the company could be forced to revise its statements, potentially leading to a drop in its stock price and even potential litigation.
Despite this risk, Navan decided to proceed with the IPO. The main reason for this is that the majority of registration statements had already been reviewed by SEC staff before the government shutdown began on October 1st.
The initial decline in stock prices is likely driven, at least in part, by this regulatory uncertainty.
Market reaction to Navan's offer is being closely monitored by other IPO candidates. Startups aiming to go public by the end of the year need to decide quickly whether they are prepared to deal with regulatory unknowns or postpone their filings until next year.
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Navan had been waiting to go public for several years. The company reportedly plans to file confidential IPO documents in 2022 and debut in early 2023 at a valuation of $12 billion.
The company, formerly known as TripActions, was last valued at $9.2 billion when it raised $154 million in a Series G round in October 2022.
Navan's customers include Shopify, Zoom, Wayfair, OpenAI, and Thomson Reuters. The company claims that its AI-powered assistant, Ava, handles about 50% of customer conversations regarding flight, hotel, and rental car reservations and changes. Navan's expense management solution helps businesses manage employee expenses through features such as automatic receipt scanning and categorization.
According to S1, the company generated revenue of $613 million (up 32%) over the past 12 months, with a loss of $188 million.
Navan's largest venture capital backers prior to the IPO included Lightspeed (24.8% stake), private VCs Oren Zeev (18.6% stake), Andreessen Horowitz (12.6%), and Greenoaks (7.1%).