Maybe Wall Street wants to hug a few unicorns, after all.
Shares of Twilio — a tech “unicorn” that was privately valued at about $1.23 billion — nearly doubled its market cap to $2.36 billion in its Thursday debut on the New York Stock Exchange.
The San Francisco-based start-up — which powers anonymous text-messaging and phone calls for mobile apps like WhatsApp, Uber and Lyft — saw its shares surge nearly 92 percent, to $28.79, at the close of regular trading.
Twilio’s dazzling debut came despite the fact that the fast-growing firm is still losing money and has warned that its business is subject to the whims of big clients.
Facebook-owned WhatsApp accounted for 17 percent of Twilio’s revenue last year, and has “no obligation to provide any notice” if it decides to ditch its services, according to a filing.
Investors shrugged off such concerns — and that may be a positive sign for scores of still-unprofitable tech unicorns, defined as privately held start-ups valued at more than $1 billion.
Recently, these unicorns have gotten their horns shredded as confidence in Silicon Valley firms has waned.
Twilio shares on Wednesday were priced at $15 — over earlier estimates of between $12 and $14. By selling 10 million shares in the initial public offering, Twilio raised $150 million.
In its most recent round of funding in the private markets, Twilio had been valued at just $11.31 a share, according to filings.
Despite the impressive one-day gain, Twilio’s relatively modest size limits its reliability as a bellwether for the tech IPO market ahead, warns Rett Wallace of New York-based Triton Research.
“Twilio is now one-tenth the size of Airbnb,” Wallace noted, referring to the home-sharing site recently valued at $24 billion on the private markets.
Indeed, 2016 remains on track to be the slowest year for tech IPOs since the financial crisis. Few expect giant unicorns like Airbnb, Uber or Snapchat to go public this year.
Still, Wallace said Twilio’s good news may augur well for Line, a Japan-based messaging app that’s aiming for a $5 billion valuation next month in dual listings on the New York and Tokyo stock exchanges.
Twilio’s debut likewise contrasts with recent lackluster tech IPOs.
Square, the mobile-payments firm founded by Jack Dorsey, lately has seen its shares languish around $9 — the same price of its November IPO.
Twilio’s Thursday IPO made founder and CEO Jeff Lawson more than $100 million richer in a single trading session, leaving the value of his 10 percent stake at more than $240 million.
