the fourth company to go public using a direct listing, rose 17.22% in their market debut Wednesday.
ZipRecruiter (ticker: ZIP) stock opened at $20, hit a high of $21.69, and ended its first day at $21.10, up $3.10 from its $18 reference price. At $21.10 a share, ZipRecruiter has a $2.8 billion valuation.
“It’s been 10 years of hard work and I’m so excited for the next 10 years. What we’re doing is so fun and so cool,” said
co-founder and CEO of ZipRecruiter. Siegel spoke to Barron’s on Tuesday, a day before ZipRecruiter’s stock began trading.
ZipRecruiter’s direct listing follows
(SQSP), the web hosting company, which went public last week using the method.
Global (COIN), the cryptocurrency exchange, also listed its shares via a direct listing in April after
(RBLX), the gaming platform, went public in March.
ZipRecruiter decided that a traditional IPO was “not necessary at this time,” Siegel said. The company didn’t need the funding that would come with a traditional IPO. Businesses who use a direct listing typically don’t raise fresh capital because they don’t sell shares. Instead, shares come from selling stockholders. For example, ZipRecruiter shareholders, including Siegel himself, are offering as many as 86,598,896 shares of class A common stock for resale, its prospectus said. ZipRecruiter itself won’t receive any proceeds from the direct listing.
ZipRecruiter is “cash-flow positive,” Siegel said. “We have more money in the bank right now than we’ve ever raised. We intend to stay cash flow positive for the future. There was no need to raise capital at the same time that we went public.”
Siegel has also registered about 10.5 million ZipRecruiter shares. When asked if he was selling, he said: “We’ll see tomorrow.”
Founded in 2010, ZipRecruiter is an employment marketplace for people looking for work and businesses seeking employees. More than 2.8 million businesses have used ZipRecruiter to find an employee, while 110 million job seekers have sought employment on the site, the filing said. The company became profitable in 2020, reporting $86 million in income from $6.3 million in losses in 2019. Revenue dropped nearly 3% to $418 million in 2020, the prospectus said.
ZipRecruiter is focused on its long-term strategic vision of building the best company in the jobs space for connecting people to their next great opportunity, Siegel said. ZipRecruiter has reduced, over the last four years, the average amount of time employers need to find staff to 16 days from 49 days, he said. “This is the result of bringing technology to a category in the job market that has never been used before. We’re still in the early days of innovation. Much greater improvement is still possible,” Siegel said.
For job seekers, ZipRecruiter operates as an “AI-powered” personal recruiter. ZipRecruiter will curate employment listings for applicants and pitch candidates to companies before they even apply, Siegel said. Job seekers, he said, hate applying to jobs but they love getting recruited. Most Americans, however, will go through their careers without ever getting directly recruited, he said. “We bring the experience of being recruited to Americans across the country,” he said.
With schools reopening and more people getting vaccinated, Siegel expects a very healthy job market in 2021. There are currently 16 million people that are unemployed, he said. There are also millions of people who are employed, and would have changed their jobs but for the Covid-19 pandemic. Instead, they chose to shelter in place at their current employer, Siegel said. “I would guess tens of millions of people will be looking for jobs,” he said.
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