Author: Erin Griffith / Source: New York Times
Brendan Mcdermid/Reuters
SAN FRANCISCO — The rush of so-called unicorn start-ups toward the public markets had a rocky start. But Thursday indicated that investors remain eager to get a piece of them.
Shares in Pinterest, the digital pin board, jumped over 28 percent on its first day of trading as a public company.
The company’s stock began trading at $23.75, above the initial public offering price of $19, and finished the day at $24.40.The company’s fully diluted market capitalization totaled over $16 billion, making it more valuable than Macy’s or Nordstrom, the retail chains. More important to investors, the price put the company’s value above its last private valuation of $12 billion, avoiding a disappointing outcome.
Zoom, a videoconferencing company, also went public to tremendous investor demand on Thursday. Shares in the company, which was last valued by private investors at $1 billion — the threshold for unicorn status among private start-ups — skyrocketed 80 percent in early trading. The shares ended the day up more than 72 percent, closing at $62. The company’s fully diluted market capitalization now exceeds $18 billion.
Eric Yuan, chief executive and founder of Zoom, said the spike created pressure for his company to deliver on investors’ high expectations.
“I looked at the price this morning and I thought, ‘Wow, I better go back tonight to get back to work,’” he said.
Ahead of the companies’ I.P.O.s, there were many questions about whether investors were willing to swallow the risk of the latest crop of tech companies.
The ride-hailing company Lyft, which went public in March, has had a troubled start. Lyft shares surged, then quickly sank below their initial price.Pinterest almost became an “undercorn” — a company that goes public for less than its private market valuation — but public market investors warmed to the company during its pitches ahead of its I.P.O., leading it to raise its proposed share price before its stock offering. The company’s debut bodes well for Uber, Slack and others, which are expected to go public this year.
Jeremy Levine, a partner at Bessemer Venture Partners, Pinterest’s biggest shareholder, said a combination of investor optimism and low volatility was helping tech I.P.O.s.
“The market is moody, but right now it’s in a good…
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