Zulily surges in market debut
The Seattle e-retailer found plenty of demand from investors in its trading debut, with the stock climbing 71.4 percent.
The New York Times
It may not be a globally popular social network or a highly regarded human-resources software company. But Zulily is finding plenty of demand from investors all the same.
Shares in the Seattle-based retailer, which focuses on flash sales of products for children and mothers, jumped $15.70, or 71.4 percent, to $37.70 in its trading debut Friday.
It was an auspicious opening for Zulily, which had already priced its offering at $22 a share, $2 above its expected range. Overall, the company raised $253 million, but could raise more if underwriters exercise an overallotment option.
Now, the public markets value the 3-year-old retailer at about $4.6 billion.
“We had hoped we’d see a great market response as I spent the past two weeks talking to investors and the story was resonating,” Darrell Cavens, chief executive officer of Zulily, said by phone from the Nasdaq. “But this is far in excess of my expectations.”
Zulily’s glowing reception will probably change what Dan Primack, of Fortune, described as a virtual lack of interest from the technology press. Unlike Twitter or Workday, the company isn’t a hot technology stock. It sells goods like the Bubblegum Vintage Kitchen, a Hogwarts train set from Lionel and women’s sweaters.
That may not excite the technology enthusiasts at the Creamery Cafe in San Francisco, but it has created a fast-growing business. Zulily more than doubled its sales in the first nine months of the year, to $438.7 million. And it reported a small $155 million profit, reversing from a $13.6 million loss in the year-ago period.
That may augur well for other online retailers like Gilt Groupe and One Kings Lane, both of which are the subjects of IPO buzz.
At Friday afternoon’s stock price, the IPO has made a paper billionaire of the company’s chairman, Mark Vadon, and a near-billionaire of CEO Cavens. The two men, who founded Zulily, previously worked at Blue Nile, which Vadon founded.
Neither sold shares in the offering. Those who did include Maveron, the investment firm co-founded by Starbucks chief Howard Schultz, and the venture-capital firms August Capital and Andreessen Horowitz.
The offering was led by Goldman Sachs, Bank of America Merrill Lynch and Citigroup. Zulily is listed on the Nasdaq Stock Market under the symbol ZU.
Bloomberg News reported Caven’s remarks from the Nasdaq.