Zoom (ZM) begins its first day of trading at $65, surging 80%

Videoconferencing software company Zoom made its debut Thursday on the Nasdaq under the ticker symbol “ZM,” and surged 80% to $65.

The initial pop gives Zoom a stock market value of $16.7 billion. Zoom is among a growing crop of tech companies going public in 2019, but with a twist: it’s profitable.

After filing to go public on March 22, Zoom estimated two weeks later that it would price shares in the range of $28 to $32. Zoom increased the range to between $32 and $35 this week, and on Wednesday it priced above the top of that range, valuing the company at…

$9.2 billion.

“This was a common question … ‘Why do you focus on profitability?’” Zoom CEO Eric Yuan said of IPO roadshow conversations in an interview with CNBC on Thursday.

Zoom raised $356.8 million after selling 9.91 million shares in the IPO. Existing shareholders, including Emergence Capital, Sequoia and Yuan sold another 11 million shares.

After Wednesday’s IPO pricing, Yuan told himself and staff “the price tomorrow is out of our control. … I said, ‘Go back to work and make sure we get more customers,’” Yuan said.

The IPO market is picking up, with Lyft and PagerDuty debuting in recent weeks, and Pinterest opening alongside Zoom on Thursday. Uber released its IPO filing earlier this month, while Postmates and Slack have confidentially filed.

Typically at the time these companies hit the market they’re still burning significant amounts of cash. Zoom is an exception, in that it earned $7.58 million in net income last year. Revenue surged 118% to $330.5.

“We are impressed with Zoom’s rapid growth while generating both cash and GAAP profitability, and enterprise traction,” Rishi Jaluria, an analyst at D.A. Davidson, wrote in a note March 25. “Furthermore, our due diligence suggests Zoom is gaining mindshare and could become the de facto standard for videoconferencing.”

At its opening price, Zoom is valued at about…

Continue reading at CNBC.com

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