Good Underdoggy

Image source: Annette Shaff - shutterstock

What's going on?

Better watch your back, Zoom: scrappy videoconferencing newcomer Pexip made its stock market debut on Thursday, and inspired investors pushed its stock price up nearly 40%.

What does this mean?

The Norwegian company took advantage of its own technology to hold an all-virtual roadshow and raise more than $200 million from investors – making it Scandinavia’s biggest tech initial public offering to date. And given those investors initially wanted to buy 12 times the amount of new shares on offer, it’s potentially no wonder Pexip’s stock price surged nearly 40% after its debut, valuing the company at close to a billion dollars.

With the coronavirus-driven lockdown forcing millions to work from home, businesses have been turning to videoconferencing services like Pexip and Zoom. Both have seen a seven-fold increase in usage in recent weeks, but as Zoom’s security issues come under increasing scrutiny, Pexip has – apparently very successfully – marketed itself as the more secure alternative.

Why should I care?

For markets: Roll out the red carpet.
Pexip’s star-studded client list – which includes the US military, German government, Intel, and Vodafone – might be testament to that increased security. See, Pexip, unlike Zoom, allows users to store data on their own networks. But the two companies do have something important in common: their valuations have been pushed to lofty levels by investors buying up potential “coronavirus winners”. Zoom’s valuation is now 50 times this year’s forecasted revenue, while Pexip’s is an estimated 15 times.

The bigger picture: Fee-fi-fo-fum.
The market for videoconferencing services might be booming, but with big booms come big competition. Just last month, telecoms giant Verizon announced it’s buying up BlueJeans, a California-based videoconferencing company with over 15,000 business customers. And late on Wednesday, American tech conglomerate Cisco reported better-than-expected profit as the lockdown boosted demand for remote-working tools like Webex, its own videoconferencing service.

Originally posted as part of the Finimize daily email.

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