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.
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