Zoom closes up 72% on its first day of public trading, valuing the company at $15.9B after it raised $356.8M in its IPO
up 75% — which would mean its market cap has soared to $16.1 billion and Yuan's net worth to $3.3 billion. A reminder: Zoom only raised about $160 million in VC, much late. https://www.forbes.com/... Ari Levy / @levynews : Zoom is valued at about 50 times its enterprise value based on its opening price. That's by far the highest multiple for U.S. software companies. Zscaler is second at 30. http://www.cnbc.com/... Jay Yarow / @jyarow : Zoom IPO seems like a massive mispricing. It's indicated to open around $60 versus a pricing at $36. http://www.cnbc.com/... @rampcapitalllc : I've never even heard of Zoom. I guess I'm a boomer. http://www.cnbc.com/... @cnbcnow : Zoom prices IPO at $36 per share, above expected range - source (via @LesliePicker) http://cnbc.com/... @wsj : Pinterest and Zoom will begin trading Thursday, entering an IPO market that has been hot and hospitable for most companies http://www.wsj.com/... Ariana Qayumi / @arianaqayumi : When our lab switched to zoom over BlueJeans 4 years ago, everyone I knew looked at me like I was crazy. 4 years later, dreams becoming reality! Woot woot! http://twitter.com/... Timothy C. Bohen / @tbohen : Pinterest and Zoom will begin trading Thursday, entering an IPO market that has been hot and hospitable for most companies, and investors have been clamoring for their stock http://www.wsj.com/... via @WSJ @wsj : Pinterest and Zoom will begin trading Thursday, entering an IPO market that has been hot and hospitable for most companies http://www.wsj.com/... @wsjmarkets : Pinterest and Zoom will begin trading Thursday, entering an IPO market that has been hot and hospitable for most companies, and investors have been clamoring for their stock. http://www.wsj.com/... WSJ Graphics / @wsjgraphics : Pinterest and Zoom will begin trading Thursday, entering an IPO market that has been hot and hospitable for most companies, and investors have been clamoring for their stock http://www.wsj.com/... via @WSJ http://twitter.com/... @bullyesq : That's because it's a zoomer product. http://twitter.com/... Steven Spencer / @sspencer_smb : Pinterest and Zoom will begin trading Thursday, entering an IPO market that has been hot and hospitable for most companies, and investors have been clamoring for their stock http://www.wsj.com/... $PINS $ZM See also Mediagazer
Context & Ripple Effects
Zoom came to market on unusually strong fundamentals: its IPO filing showed $330.5M in revenue, up 118% YoY, plus actual profits — rare for a software debut. It then priced at $36, above the $28-$32 range it had set weeks earlier, and still opened roughly 80% higher.
The close at $15.9B — versus the $9.2B the pricing implied — makes this the richest U.S. software IPO multiple on record at roughly 50x enterprise value, per CNBC's Ari Levy, well ahead of Zscaler at 30x. The gap between the $36 print and the ~$60 open is the story bankers will be arguing about.
First-order effects
- Eric Yuan's stake is worth about $3.3B overnight, and Zoom raised just $356.8M while handing early investors a company valued near double its pricing level — capital that cost founders far less dilution than the ~$160M in VC it had previously taken.
Second-order effects
- Underwriters' pricing models get publicly challenged: Jay Yarow calls the open-versus-$36 gap a massive mispricing, and the pattern repeats a year later when ZoomInfo closes up 62% on its first day — evidence that profitable, fast-growing SaaS is being systematically underpriced into public markets.
Third-order effects
- If the pattern holds, IPO allocation becomes the contested resource rather than access to capital itself — pressure builds on banks' book-building practices and on direct-listing alternatives for companies that, like Zoom, don't need the cash.
- Public-market investors, not VCs, end up setting the clearing price for high-growth software: Zoom's subsequent Q2 report of $663.5M revenue, up 355% YoY, with $186M in net income validated the premium multiple and reset what buyers will pay for profitable SaaS.
The trend: Profitable, high-growth software companies are going public at prices the market immediately re-rates far higher, shifting pricing power from underwriters and late-stage VCs to public-market investors.