Vroom, the US online car sales company, raced out of the starting gate on its first day of trading, more than doubling in price as investors continued to show strong demand for freshly listed stocks.
The New York-based company’s shares closed just shy of $48 on Tuesday, 117 per cent above its offering price of $22, which had already exceeded its targeted range of $18 to $20.
Vroom raised $470m in the offering after selling just over 21m shares, or 13 per cent more than the company had initially planned. Its market capitalisation closed at $5.4bn.
The upsized listing reflects a surge in appetite among investors for initial public offerings, in a buoyant US market that this week wiped out all of its coronavirus-linked losses for the year. Warner Music last week sold $1.9bn of its shares in the biggest listing of the year, which was expanded a day before the IPO and priced at the top end of its range.
ZoomInfo, a tech group that offers marketing software, followed later in the week, pricing above its range to raise $935m. The stock jumped 60 per cent on its debut.
“There’s no doubt we were encouraged when the market is trending in the right direction,” said Paul Hennessy, chief executive of Vroom in an interview. “There’s enthusiasm in the markets and we got to see a little of that today.”
Analysts said fund managers had regained an appetite for risky assets, satisfied that extraordinary stimulus efforts from governments and central banks could alleviate the worst effects of the pandemic. On Monday the S&P 500 gained 1.2 per cent to erase its losses for the year, while the technology heavy Nasdaq Composite hit a record high, pushing the benchmark up 10.6 per cent this year.
Vroom manages an online marketplace for used cars that facilitated almost 19,000 sales last year. Its revenue increased by almost 40 per cent to $1.2bn in 2019 but net losses jumped by more than two-thirds to $143m, according to figures from the company.
The group is…