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Online recruiting and job search firm ZipRecruiter will go public via direct listing later this month. The company will trade on the New York Stock Exchange under the ticker "ZIP."
ZipRecruiter uses artificial intelligence to match potential hires and employers. Since ZipRecruiter was founded in 2010, over 2.8 million businesses and 110 million job seekers have come to the company for their hiring and job search needs.
Recruiting new employees is a huge business in the United States. Employers spend more than $200 billion every year finding qualified candidates for openings at their company. More than $13 billion of that money goes to online recruiting firms like ZipRecruiter.
The ZipRecruiter prospectus points out that 20 years after moving online, the recruiting business remains inefficient. Job seekers must navigate across multiple sites in search of jobs.
Employers must figure out which of the many job boards, search engines, and social networks will help them find the right candidate for their company.
So, employers and job seekers need a faster, easier solution. And ZipRecruiter may provide that.
Today, we'll talk about when you can buy the stock. First, here are some things you should know about the company.
What Is ZipRecruiter?
ZipRecruiter acts much like a matchmaker by pairing employers and potential employees closest to the types of jobs and candidates they seek.
Using data obtained from billions of job searches, ZipRecruiter has developed artificial intelligence that helps find the best fit for both parties. According to the prospectus, its technology delivers high-quality matches immediately after a job goes live and provides tools to streamline the vetting process.
ZipRecruiter offers employers fixed-rate or performance-based pricing plans.
For applicants, ZipRecruiter offers instant access to millions of jobs around the United States. Once their resume uploads to the site, applicants can apply for positions with a single click of their mouse. The user-friendly dashboard then allows them to track all of their applications.
Using its artificial intelligence programs, ZipRecruiter can tell applicants how strong a match they are for each job listed on the site. This helps job seekers target the application process to those employers most likely to hire them. Each job listing gets a rating of Great Match, Good Match, Fair Match, or Not a Match for that particular applicant.
This will be a direct listing, not a traditional IPO. The company will receive no money. All proceeds of the up to 86,598,896 public shares will be given to selling stockholders.
That said, if you see shares available, here's what you do…
Should You Buy ZipRecruiter Stock?
This should be a fast-growing marketplace. At just 6% of total recruiting expense, there is plenty of room for online recruiting to keep taking market share from in-person recruiting.
There is also a huge opportunity to add smaller and mid-sized employers that traditionally cannot afford the best in-person recruiters.
Zip Recruiter should have a unique opportunity to take market share from existing recruiters and enlarge the marketplace substantially by including companies that have not been able to use high-end recruiting services.
We are not sure where the first trade in the stock will be when the shares debut on May 26. But management has said that they believe the fair value of the stock in April was $25.04. If the stock opens there, it will be a valuation of about $3.3 billion.
ZipRecruiter did about $430 million in revenue in 2020 and earned $63 million. So far, in 2021, revenue has been $125 million with profits of $9.4 million.
Is that a good price? It depends on what the market decides about ZipRecruiter.
When to Buy ZipRecruiter Stock
If the market decides that ZipRecruiter is a high technology company using artificial intelligence to solve a problem, seven times sales is probably not an awful valuation.
If, however, the market decides to treat ZipRecruiter as a staffing company, that is way too high a valuation.
The best way to play the direct listing is to try and buy shares near that $25 mark. Use a tight stop. If the market likes the high growth opportunity this company could represent, you could get a massive move in the first few trading days.
If you are stopped out, step back and let the dust clear before considering reentering the stock.
If the shares open at a multiple of $25, move onto the next idea.
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