There was some tech jubilance in the air on Wall Street and in Silicon Valley as a pair of newly public companies — Zoom Video Communications Inc and Pinterest Inc — saw their stocks soar on their first trading day.
No one wanted talk about a bubble, not to mention its prospects for bursting, but the strong initial performances might have reassured investors following ride-hailing company Lyft Inc’s disappointing start less than a month ago.
Zoom, which makes video conferencing technology for work, came out as a dark horse — or perhaps a dark unicorn. Its shares surged about 81 percent when they began trading and ended the day up 72 percent at US$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 percent to close at US$24.40.
The surge would be good news for Lyft’s larger rival Uber Technologies Inc, which is due to go public in the next few weeks along with other possible tech initial public offerings (IPOs) from workplace messaging service Slack Technologies Inc and data analytics company Palantir Technologies Inc.
Pinterest chief executive officer and cofounder Ben Silbermann has long tried to distinguish the company from social media — Pinterest is not about sharing with friends and following celebrities.
As an ad-supported, consumer-facing business, it is often lumped in with the likes of Snap Inc, Twitter Inc and Facebook Inc.
“There are going to be some comparisons,” he said in an interview, but he added that, coming off of the company’s pre-IPO “road show” where he spoke to potential investors, he was “really happy how thoughtful investors were,” understanding that Pinterest is about “yourself” and not about entertainment or communication.
If they truly do, that could help Pinterest in the long run. Other high-profile companies, such as Twitter and Snap, also had strong initial trading days, but then saw their stock prices fall substantially in the subsequent months.
Just three weeks ago, Lyft also did well on its first trading day before Wall Street pumped the brakes. Its stock is now trading nearly 20 percent below its IPO price.
Pinterest joins a crowded market of ad-supported apps vying for people’s attention and advertisers’ money.
While the digital advertising space is dominated by Google and Facebook, Pinterest’s believers say that the company is doing something different from both, inspiring people online to do something offline, whether that is remodeling a kitchen or cooking some chicken Parmesan.
For all the cautionary tales, there are companies such as payment processor Square Inc, which went public at US$9 per share, rose 45 percent on the first day of trading and now sells for about US$70 a share.
San Francisco-based Pinterest has more than 250 million monthly users. Revenue, mainly through advertising, reached US$736 million last year and the company posted a loss of US$63 million.
Zoom, based in San Jose, California, had US$330 million in revenue last year and profit of US$7.6 million, making it one of the few profitable technology companies going public this year.
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