The IPO window is open (again)

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

ZoomInfo went public yesterday. After pricing its IPO $1 ahead of its proposed range at $21 per share, the company closed its first day’s trading worth $34.00, up 61.9%, according to Yahoo Finance. Then the company gained another 5.2% in after-hours trading.

Whether you feel that this SaaS player was worth the revenue multiple its original, $8 billion valuation dictated — let alone that same multiple times 1.6x — the message from the offering was clear: the IPO window is open.

This is not news to a few companies looking to take advantage of today’s strong equity prices.

Used-car marketplace Vroom is looking to get its shares public before its Q2 numbers come out, despite a history of slim gross profit generation. The company hopes to go public for as much as $1.9 billion, a modest uptick from its final private valuations.

We’ll get another dose of data when Vroom does price — how much investors are willing to pay for slim-margin revenue will tell us a bit more than what we learned from ZoomInfo, which has far superior gross margins. Investors have already signaled that they are content to value high-margin software-ish revenues richly. Vroom is more of a question, but if it does price strongly we’ll know public investors are looking for any piece of growth they can find.

This brings us to the latest news: Amwell has confidentially filed to go public. Formerly known as American Well, CNBC reports that the venture-backed telehealth company has dramatically expanded its customer base:

Telemedicine has seen an uptick in recent months, as people in need of health services turned to phone calls and video chats so they could avoid exposure to COVID-19. The company told CNBC last month that it’s seen a 1,000% increase in visits due to coronavirus, and closer to 3,000% to 4,000% in some places.

For investors who just put $194 million into the company in May of this year, the news could be welcome. If the firm can quickly raise its valuation through a public debut, they could make a quick buck.

For the investors who put the other $500 million or so into the business, a huge boost in demand followed by a liquidity event must feel like a winning lottery ticket.

But it won’t be a perfectly smooth road. Investors who had bid shares of companies like Slack and Zoom to new heights recently lost some faith when growth rates didn’t match their anticipations.

There is less built-up expectation for Amwell, naturally, as it hasn’t had public earnings for investors to project from. Still, the company will have to show that the pandemic has been material to its growth rates and that it can maintain revenue growth in coming quarters once things return to something approaching normal. Will regular folks still demand telemedicine solutions when doctors’ offices reopen?

But the fact that the company is accelerating from a funding round straight into a public offering is a good indication that investors and bankers think that the IPO window is open. Recession? What recession!

As a final aside, remember all those unicorns that wanted to go public but then put their IPOs on hold? There now appears to be no excuse for not going out, unless those unicorns took hits from COVID-19. Otherwise, if Vroom is going public, why the hell can’t you?