Shares in Pinterest, the digital pin board, jumped over 28 per cent Thursday, its first day of trading as a public company. The company’s stock began trading at $23.75 (€21.12), above the initial public offering price of $19, and finished the day at $24.40.
The company’s fully diluted market capitalisation totaled over $16 billion, making it more valuable than US retail giants Macy’s or Nordstom. More important to investors, the price put the company’s value above its last private valuation of $12 billion, avoiding a disappointing outcome.
Zoom, a videoconferencing company, also went public to tremendous investor demand Thursday. Shares in the company, which was last valued by private investors at $1 billion skyrocketed 80 per cent in early trading. The shares ended the day up more than 72 per cent, closing at $62. The company’s fully diluted market capitalization now exceeds $18 billion.
Before the companies’ IPOs, there were many questions about whether investors were willing to swallow the risk of the latest crop of tech companies. Ride-hailing company Lyft, which went public in March, has had a troubled start. Pinterest almost became an “undercorn” - a company that goes public for less than its private market valuation - but public market investors warmed to the company during its pitches before its IPO, leading it to raise its proposed share price before its stock offering. The company’s debut bodes well for Uber, Slack and others, which are expected to go public this year.
The demand for Zoom stock, and the leap in its share price, showed investors are just as eager to back lesser-known enterprise software companies - particularly profitable ones ? as they are high-profile apps geared toward consumers. Pinterest is closer to turning a profit than Uber and Lyft. It lost $63 million on revenue of $756 million last year, a sharp contrast to the nearly $1 billion Lyft lost and the $1.8 billion Uber lost in the same period. Pinterest’s chief executive and co-founder, Ben Silbermann said he planned to celebrate by taking a nap. He said he told his colleagues that the IPO was a little like graduating from school. “You have to throw your hat in the air and take a moment,” he said. “But it’s not like when you graduate, all your problems are solved,” he said.
- The New York Times News Service
