Two more tech unicorns have joined the public markets. Early indications suggest Zoom and Pinterest jumped into a very receptive market. Each company saw impressive performance in their public debuts, with Zoom and Pinterest closing just under 75 percent and nearly 30 percent above their offering prices, respectively. Zoom and Pinterest have each shown strong performance in their run up to their IPOs. The companies have grown revenue at 133% and 59% CAGRs over the past two years, respectively. Zoom also benefitted from one big selling point – profits – a rarity for these high-growth, venture-backed companies. Pinterest’s financials suggest profits may be on the horizon.
While public investors in Zoom are undoubtedly thrilled with the nearly 75% appreciation in share price on Thursday, there is another group of investors with even more to celebrate. At its last private funding round, Zoom raised money at $14.97 per share. At the $62.40 closing price today, those share prices have appreciated around 414%. Venture Capitalists like Sequoia Capital and Qualcomm Ventures, as well as those who purchased shares on secondary markets when the company was still private, have likely experienced significant gains.
A similar story is illustrated for Pinterest in the chart above. Despite a down-round IPO, the company closed first day trading nearly 30% above its offering price and above all private funding share prices. Mirroring the idea of strong appreciation, the company’s closing share price was around 240% above the series F funding price per share. That said, no one can say where price discovery will take these firms in the months and years to come. Public investors are hoping that the companies’ valuations will continue to increase as they did when they were private.
While the press around Unicorn IPOs has been negative due to Lyft’s price slump, today’s opening pop in the shares of Zoom and Pinterest suggests that investors are not looking at “risky” unicorns as a group, but instead are valuing each company on their merits. One important differentiating factor between Lyft and the two IPOs today is that Zoom and Pinterest operate in markets with proven business models. Lyft is operating in ride-sharing – a market yet to turn a profit.
This report is distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation, and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.
Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own financial advisors before making any investment decisions. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.
This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.
The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about the subject matter therein, including all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be during their employ directly or indirectly related to their specific views contained in this report.
Analyst compensation is indirectly based upon the growth and success of SharesPost, Inc., including the overall performance of its subsidiaries, the individualized performance of any such analyst, and the development and progression of the overall research effort. SharesPost, Inc. earns revenue from, among other avenues, brokerage sales, and therefore the analyst may indirectly benefit from research reports that have the ultimate effect of increasing trading activity, either through SharesPost Financial Corporation and/or with SharesPost Investment Management, LLC.
This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.
Securities referenced in this report may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.
Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.
Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.
SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.
Copyright SharesPost, Inc. 2019. All rights reserved.