Salesforce managed to turn a huge profit in 2019 in Zoom’s IPO. After they invested $100 million at the offering price, the stocks surged immediately, and both companies realized there could be huge potential behind this tactic.
The companies decided to go ahead and acquire $75 million in stocks of Monday.com, an Israeli software vendor, which debuted Thursday on the Nasdaq charts. Monday.com provides cloud-based tools to assist in collaborative work. Albeit the company didn’t quite carry the same momentous surge as Zoom’s IPO, the stock still did rise 15%, from $155 to $178, making both companies an easy profit. When trading ended, the sakes of the acquiring companies was at a healthy $11.55 million. As is the norm with these arrangements, Zoom and Salesforce will not be able to sell for 6 months.
Salesforce began to adopt this strategy of purchasing IPO shares, as it has proven to be as successful as investing in start-ups and well-established companies. One of the more significant investments made by Salesforce was into Snowflake’s IPO, a stake that doubled in value to $529 million in the company’s database of first day trading. This investment, as well as a separate investment into nCino, turned out to directly impact the annual gain of Salesforce, which was a whopping $2.17 billion in 2020. Though nCino was backed by Salesforce long before its IPO.
Zoom is also diversifying its investments, venturing into startups that will help add to Zoom’s platform. This $100 million fund is primarily focused on investments, though three quarters of this fund went into the Monday.com investment.
Although a 15%-day increase is a promising gain, it is not as high as the other pops that directly affected the profits of the CRM powerhouse. The company has received criticism for dedicating too much money to cheap stocks. Though Salesforce maintains huge profits from first day gains from Doordash, Airbnb, and Snowflake.