Zoom Shares Gains 80 Percent At IPO Debut, Valuing The Company At US$15.9 Billion

Zoom IPO
Eric Yuan, CEO of Zoom Video Communications takes part in a bell ringing ceremony at the NASDAQ MarketSite in New York (Photo: Reuters)

The stock market debut of the video conferencing firm Zoom was a massive success, with shares surging to 80 percent of the initial IPO pricing.

The company originally set its pricing to US$36 per share for its debut on NASDAQ; a price already significantly higher than what was originally planned. As trading started on Thursday, prices for the company's shares ballooned to as high as US$65 per share. Zoom's shares finally closed at an impressive 72 percent above its IPO at US$62 per share.

As the first day of trading closes, the company now has a public valuation of more than US$15.9 billion, a massive jump from its latest private valuation in 2017 of just US$1 billion. Unlike other tech startups that have recently gone public, Zoom is a particularly attractive property for investors given that it does actually make money.

Zoom initially filed its IPO back in March, where it announced an IPO price range of US$28 to US$32. With a staggering amount of demand and interest from investors, the firm announced that it would be increasing its range to US$32 and US$35. Prior to its debut, the firm announced an official IPO pricing of US$36, which would value the company at US$9.2 billion.

The firm had sold all of its 9.91 million shares during its IPO, raising new capital amounting to US$356.8 million. The firm's existing shareholders, including Sequoia Capital, Digital Mobile Venture, and Bucatini Enterprises Limited, also sold an additional 11 million shares during the IPO.

Various stock markets are now beginning to see a variety of tech firms going public this year. Ride-hailing firm Lyft and cloud-computing company PagerDuty recently went public. Meanwhile, Pinterest had launched its IPO around the same time as Zoom's IPO. Among the biggest tech firms to go public this year is ride-hailing firm Uber, which is expected to go public anytime next month. Other tech companies that have announced their intention to go public this year include Slack and Postmates.

What differentiates these companies from Zoom is that most of them are actually still hemorrhaging money. Zoom, on the other hand, has reported significant revenue growths over the past few years. Last year, the company reported earnings of around US$7.8 million.

According to analysts, most investors were likely impressed with Zoom's rapid growth. The rate of the company's revenue growth was taken as a clear indication of future profitability, which is likely why there was such a high demand for its IPO. 

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