So far, 2019 has been a blockbuster year for initial public offerings, with some comparing the latest frenzy to the IPO boom of 1999.
The Renaissance Capital IPO ETF (NYSE:IPO), which closed at an all-time high on Tuesday, is up 37% so far this year, more than doubling the S&P 500’s 16% gain over the same period.
While high-profile names like Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) have failed to catch on with investors since their highly anticipated IPOs, Beyond Meat (NASDAQ:BYND) unexpectedly took financial markets by storm, with its stock up a whopping 580% since going public in May.
Besides Beyond Meat, a number of other IPOs have more than doubled in valuation since going public this year, with more than a dozen now up by at least 50% since making their trading debut. These three tech unicorns are positioned well to become market leaders in their respective fields thanks to rapid growth and large market opportunity.
1. Zoom Video Communications: Up 176%
Zoom Video Communications (NASDAQ:ZM), which provides remote video-conferencing services, saw shares surge 72% in their first day of trading on April 18. The stock ended at $99.64 on Tuesday, up 176% from their list price of $36, earning it a valuation of $26.7 billion.
Unlike many of its IPO peers, Zoom is already generating profit. It earned 3 cents per share in its first quarter as a public company when it released results on June 6. Revenue totaled $122 million, up 103% year-over-year.
The upbeat results were driven by an 86% surge in customers to 58,500. Subscribers contributing more than $100,000 in trailing 12-month revenue jumped 120% from the same quarter last year to 405.
We expect Zoom to continue to prosper thanks to robust growth in memberships, placing it in prime position to emerge as a potential front runner in video conferencing.
2. PagerDuty: Up 127%
PagerDuy (NYSE:PD)—a cloud-based digital management platform serving IT needs of businesses—launched its IPO on April 11, with shares jumping almost 60% during the first day of trading. The stock, which closed at $54.50 last night, is up 127% from its offering price of $24, giving it a valuation of $4.2 billion.
The San Francisco-based cloud computing provider delivered an impressive beat-and-raise quarter in its first earnings report as a public company on June 6, posting a loss of 22 cents a share on revenue of $37.3 million, both better than expected.
Morgan Stanley’s Keith Weiss dubbed PagerDuty’s first report “a successful kickoff,” as revenue growth accelerated to 49% and gross margins improved. “Furthermore, the IPO looks to have improved PagerDuty’s brand awareness, as the company added the most customers in over two years,” he wrote.
PagerDuty added 468 new clients, coming in well ahead of the consensus estimate of 340. It now has a total count of 11,680, up 15% year-over-year.
Despite lofty valuation levels, we expect PagerDuty to remain one of the best-performing enterprise software names in the market thanks in large part to its accelerating growth in sales and customer wins.
3. CrowdStrike: Up 125%
Crowdstrike (NASDAQ:CRWD), whose cloud-based technology is used to detect and prevent security breaches, made its trading debut on June 12, with shares spiking by 70%. The stock, which settled at $76.50 yesterday, has gained 125% from its IPO price of $34, pushing its market cap to $15.2 billion.
The Sunnyvale, California-based cybersecurity leader’s revenue grew 125% to $249.8 million in the fiscal year that ended January 31, according to its prospectus, though it recorded a net loss of $140 million. It saw subscriptions to its cloud platform double year-on-year to more than 2,500, and now counts Amazon Web Services, Credit Suisse and Tribune Media among its clients.
Despite lofty valuation levels, CrowdStrike’s stock still looks attractive going forward, considering the strong demand it has seen for its cloud-based cybersecurity tools.