There’s some tech jubilance in the air on Wall Street and in Silicon Valley as a pair of newly public companies — Zoom and Pinterest — saw their stocks soar last week on their first trading day.
The strong initial performances might reassure investors with jittery nerves following ride-hailing company Lyft’s disappointing start less than a month ago.
Zoom Video Communications, which makes video conferencing technology people use for work, came out as a dark horse, its shares surging about 81% when they began trading and ending the day up 72% at $62. Pinterest, a much better known company that serves as a digital pinboard for people who want to see wedding, meal-planning, home renovation and other ideas, jumped 28% to close at $24.40.
Dan Morgan, senior portfolio manager for Synovus Trust, said an initial uptick is a good sign. “It shows there is still strong demand in the tech sector,” he said.
The surge would be good news for Uber, which is due to go public in the next few weeks along with other possible tech IPOs from workplace messaging service Slack and data analytics company Palantir.
Ben Silbermann, Pinterest’s CEO and co-founder, has long tried to distinguish the company from social media. Pinterest, after all, isn’t about sharing with friends and following celebrities. Still, as an ad-supported, consumer-facing business, it often gets lumped in with the likes of Snap, Twitter and Facebook.
He said in an interview that coming off the company’s pre-IPO “roadshow” where he spoke to potential investors, he was “really happy how thoughtful investors were,” understanding that Pinterest is about “yourself” and not about entertainment.
If they truly do, that could help Pinterest on the long run. Jeremy Levine, a partner at early Pinterest investor Bessemer Venture Partners, said he doesn’t see Facebook and Google’s dominance in digital ads as an insurmountable duopoly. He pointed to the software business, where, historically, companies like SAP, Microsoft and Oracle, or Cisco with its WebEx video conferencing tool, were “hugely dominant.”
“Zoom came along and built just a better product,” he said. “They could persuade customers to come to a new vendor and go through the hassle of establishing a new relationship.”
Zoom, based in San Jose, Calif., had $330 million in revenue last year and profit of $7.6 million, making it one of the few profitable technology companies going public this year.
Barbara Ortutay writes for the Associated Press.