What Makes an Attractive IPO?

By DirectorCorps

September 18, 2019 All Industries

Despite a government shutdown in early 2019, the IPO market has been fairly strong. Early signs indicate that 2019 could come close to a record last set in 2000, when $97 billion was raised in the dot-com bubble. This year, IPO research firm Renaissance Capital projects the IPO market may raise more than $100 billion. But Uber Technologies’s IPO put a pall on everything, with story after story hashing out the details as to why the company’s stock price tanked after its IPO. Investors like to see profits or a clear path to profitability, and not all the household names in tech can show that. Zoom Video Communications, on the other hand, had a completely different reception. The tech company provides video conferencing software, including up to 40 minutes free, and posted an adjusted net income of $5.7 million in the fourth quarter of 2018, on revenue of $105.8 million. It was rewarded for its focus on the bottom line. In fact, its share price rose 120 percent by early May— in less than a month after its IPO—making it the best-performing public offering of the year among offerings raising at least $300 million. The soaring price is leading investors to speculate the stock is hugely overvalued.

But Zoom definitely has characteristics that win over customers, including a good product. It also is wooing investors with substantial growth in the last few years. Want to see what the top performing IPOs were so far this year? Click here to find out. You might learn something about how to go public and when.