Navan IPO tumbles 20% after historic debut under SEC shutdown workaround

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 is the first to use one New SEC rules which allows for 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.

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.

Navan has been waiting to go public for several years. The company is said to have filed its Confidential IPO Documents in 2022 and planned to debut in a $12 billion valuation Early 2023.

The company, formerly known as TripActions, was last priced $9.2 billion when it raised a $154 million Series G round in October 2022.

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 posted revenue of $613 million in the last 12 months (up 32%), compared with a loss of $188 million. of S1.

Navan’s largest venture capital backers prior to the IPO included Lightspeed (24.8% stake), solo VC Oren Ziv (18.6% stake), Andreessen Horowitz (12.6%), and Greenocks (7.1%).