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Zoom begins its first day of trading at $65, surging 80%

Eric Yuan, founder and chief executive officer of Zoom Video Communications Inc., center, rings the opening bell during the company's initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Thursday, April 18, 2019.

Videoconferencing software company Zoom made its debut Thursday on the Nasdaq under the ticker symbol "ZM," and surged 80% to $65.

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The initial pop gives Zoom a stock market value of $16.7 billion. Zoom is among a growing crop of tech companies going public in 2019, but with a twist: it's profitable.

After filing to go public on March 22, Zoom estimated two weeks later that it would price shares in the range of $28 to $32. Zoom increased the range to between $32 and $35 this week, and on Wednesday it priced above the top of that range, valuing the company at $9.2 billion.

Zoom raised $356.8 million after selling 9.91 million shares in the IPO. Existing shareholders, including Emergence Capital, Sequoia and CEO Eric Yuan, sold another 11 million shares.

The IPO market is picking up, with Lyft and PagerDuty debuting in recent weeks, and Pinterest opening alongside Zoom on Thursday. Uber released its IPO filing earlier this month, while Postmates and Slack have confidentially filed.

Typically at the time these companies hit the market they're still burning significant amounts of cash. Zoom is an exception, in that it earned $7.58 million in net income last year. Revenue surged 118% to $330.5.

"We are impressed with Zoom's rapid growth while generating both cash and GAAP profitability, and enterprise traction," Rishi Jaluria, an analyst at D.A. Davidson, wrote in a note March 25. "Furthermore, our due diligence suggests Zoom is gaining mindshare and could become the de facto standard for videoconferencing."

At its opening price, Zoom is valued at about 50 times its enterprise value, which is by far the highest multiple for U.S. software companies. Zscaler, a security software company, has an enterprise value to sales ratio of 30, according to FactSet.

WATCH:Study finds IPO first day returns don't predict long run returns

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