The tech IPO is roaring back in pandemic

As the coronavirus spread in March, Vroom, a startup that sells used vehicles online, shelved its plans to go public and rushed to shore up its operations.

But with many dealerships closed under shelterinplace orders, people started buying more cars online, benefiting Vroom with record sales in March and April, the company said.

“We saw the whole world stabilizing,” said CEO Paul Hennessy. “At the end of April, we said, ‘OK, maybe we should actually go on the offensive here.’ ”

Vroom, which is based in New York, capped that offensive by going public this month. Its share price more than doubled on the first day of trading as the company raised $495 million from its offering.

Vroom is part of a group of startups that has moved quickly to go public as the initial shock of the coronavirus has worn off. The stock market, which plummeted when the outbreak swept the United States, has rallied strongly in recent weeks. Since its nadir in late March, the S&P 500 index has climbed 40%.

As the market has bounced back, SelectQuote, an online insurance provider; ZoomInfo, a sales software data provider; Warner Music Group, a record label; and Vroom have gone public. And more initial public offerings are on the way.

Lemonade, an insurance startup valued at $2.1 billion, said this month that it had confidentially filed to go public. DoubleDown Interactive, a mobile gaming company, also filed to go public this month.

Some of the biggest Silicon Valley startups are taking steps toward an IPO, too. Airbnb, the homerental startup valued at $31 billion, said it hadn’t ruled out going public this year. Palantir, a digital surveillance company valued at $20 billion, is preparing to file for an IPO in the coming weeks, said a person briefed on the startup’s plans, who declined to be named because the talks were private.

Palantir declined to comment; Bloomberg reported earlier on its IPO plans.

“The window is open,” said Previn Waas, a partner focused on IPOs at the professional services firm Deloitte. “Everyone has figured out that a virtual IPO is possible. There’s an appetite for companies to go public.”

Jeff Thomas, head of West Coast listings and capital markets at the Nasdaq exchange, said, “Everybody who was in process is gearing back up.”

Morgan Stanley had spent the last few months helping companies affected by the coronavirus find financing in every form — except public offerings, said Colin Stewart, Morgan Stanley’s head of technology equity capital markets. The market was too volatile, and companies had to assess how the virus had changed their financial forecasts, he said.

But now with the stock market more stable, the situation has changed. “It’s clear there is a lot of pentup investor demand to look at IPOs,” Stewart said.

Wall Street is embracing them, even though many of the companies are losing money. Vroom lost $143 million last year on $1.2 billion in revenue, according to its disclosures. Food delivery startup DoorDash, which filed in February to go public and has seen increased business during the pandemic, has also burned through hundreds of millions in cash and is unprofitable.

Last year, highprofile money losers such as Uber and Lyft also went public — and promptly skidded in the stock market. Their disappointing performances and the failed IPO of WeWork set off a wave of prudence across the startup world.

But excitement for new listings — especially for fastgrowing tech companies — has sidelined the question of profitability. Investors have become more tolerant of moneylosing companies because the virus has accelerated the adoption of technology like ecommerce, virtual learning, streaming, telehealth and delivery, said Gavin Baker, chief investment officer at Atreides Management, which invests in private and public companies. “COVID pulled the world into 2030,” Baker said.

The window for IPOs right now may be small. A second wave of virusrelated shutdowns could send the stock market into another tailspin. Companies also need to navigate disclosing their secondquarter financials, as well as holidays, including Labor Day and Yom Kippur. Plus, there is the November presidential election, which may create volatility in the market.

As a result, more companies than usual are looking to go public in August, a month they traditionally avoided because people were often on vacation, Thomas of Nasdaq said. The exchange is telling companies to be ready to go public at any time, he said, and to have other financing ready in case they can’t.

For CEOs trying to take their companies public now, the timing is a nailbiter. Henry Schuck, founder and CEO of ZoomInfo, had been planning to get his company out to the stock market in late March. But when the virus hit, he started checking the VIX, an index that measures stock market volatility, every day. The index was rarely higher than 20 over the past decade, but in March, it topped 80.

“The market was just not in a place to have an IPO come out,” he said.

In May, after the market had stabilized, Schuck decided to go for it. But there were other challenges. While executives typically plan a roadshow to pitch shares to investors, he was stuck at home.

So he crammed backtoback virtual meetings with investors into a week. Even though he was at home, he said, he made sure to dress up and even wear shoes. On the morning of ZoomInfo’s IPO, June 4, Schuck hit a ceremonial virtual button to open trading, alongside his wife and 4yearold daughter. ZoomInfo’s shares rose more than 60% on the first day of trading.

Erin Griffith is a New York Times writer.

Zoominfo A Zoominfo photo shows an image of Henry Schuck, its founder and chief executive, ringing Nasdaq’s opening bell remotely with his wife and daughter as his company goes public June 4.