Stock price for cloud-based video collaboration service soars in IPO
Zoom Video Communications — known simply as Zoom — showed the chronic cash burners of Silicon Valley start-ups how the market appreciates a combination of innovation and profitability as its stock price rocketed 72% on its IPO. The company is now valued at nearly $16 billion.
The Lowdown: It was anticipated that Zoom would show a strong performance right out of the public-market gate. The company is not only a unicorn — a company with a valuation greater than $1 billion — but reportedly profitable. In its IPO filing, Zoom reported $330 million in revenue and $7.5 million in profit for its past fiscal year — a rarity among cloud start-ups. As a result, investors and market watchers kept a close eye on Zoom’s IPO walkup and market debut.
The Details: Zoom premiered on NASDAQ at $36 a share. At one point during the first day of trading, Zoom was trading 80% above its initial asking price. By the closing bell, Zoom shares were $62 — 72% above the opening and lifting its valuation to nearly $16 billion.
Background: Founded by former Webex co-creator Eric Yuan, Zoom challenged the incumbents of the videoconferencing and collaboration market by creating a simple-to-use, cost-effective platform. Yuan, a Chinese immigrant, said he was embarrassed by what happened to Webex following the Cisco acquisition and set a goal of creating a better collaboration platform. While the crowded video collaboration market presented many challenges, and the incumbents — Cisco Webex, GoToMeeting, and others — are innovating, Zoom captured lightning in a bottle with its intuitive service.
The Buzz: “Every journey starts somewhere. My journey with Zoom began almost eight years ago with a desire to build a video-first unified communications platform that would make users truly happy,” wrote Yuan in a note to partners and customers. “This IPO is us shouting out loud to the world that we are here to stay, to build, to care, and to deliver happiness.”