Zendesk (ZEN), the Software-as-a-Service platform operator, has seen its shares gain more than 50% since their debut on Thursday of last week.
And while a sharp rally after a public debut is not uncommon, Zendesk’s IPO comes amid a terrible market for cloud and internet stocks.
Cloud and internet stocks that became momentum darlings for investors, such as FireEye (FEYE) and Workday (WDAY), lost as much as 60% peak-to-trough from February to May.
Even technology stalwarts like Amazon (AMZN) and Google (GOOG) saw their shares drop considerably from late-winter through the spring.
And Box Inc., which offers cloud storage services, has reportedly delayed its own much-anticipated IPO.
But after the sharp dives that have been seen in these tech issues, Zendesk may be providing investors with a glimmer of hope.
Zendesk’s IPO benefitted from what was seen as unaggressive pricing. The $US9 share offering price compared to a $US12.08 valuation that had been implied in stock options granted to employees on March 12, according to the company’s S-1.
Zendesk has also steadied the IPO waters after slides following the notable debuts of ‘Candy Crush’ maker King Digital (KING) and online food ordering service GrubHub (GRUB), which have fallen 15% and 8%, respectively, since their initial offers earlier in the spring.
And while Zendesk has endured losses in each of its years since inception, investors may also see Zendesk as a potential takeover candidate for a larger tech company looking to bolster its cloud presence, like Microsoft (MSFT) or Oracle (ORCL).
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