Stocks rose on news that consumer spending was strong in March and U.S. jobless claims fell to a 50-year low. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both closed higher.
Today's stock market
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Initial public offerings (IPOs) made headlines today, with investors clamoring for shares of Zoom Video Communications (NASDAQ:ZM). Elsewhere, strong results from United Rentals (NYSE:URI) were a positive indicator for the U.S. economy.
Zoom IPO lives up to its name
Shares of Zoom Video Communications rocketed higher during their first day on the public markets, closing 72.2% above the offering price at $62.00. The offering price had already been raised from $32 in a filing 10 days ago to $36. At the closing price, the company is valued at $16.8 billion.
Zoom's core product is a cloud-based video system for online meetings. The company is growing rapidly, with revenue in the fiscal year ended Jan. 31, 2019, up 118% to $330.5 million. Zoom has 344 customers that contributed more than $100,000 in revenue, up from 143 the year before.
Unlike other high-profile IPOs, Zoom is actually profitable, having earned $7.6 million, or $0.03 per share last year. After the offering, the company also has over $600 million in cash and marketable securities and no long-term debt.
Investors today were excited about a tech "unicorn" that is growing so quickly and is already profitable with a rock-solid balance sheet -- so much so that they were willing to pay a rich 50 times revenue to own a piece of it.
United Rentals boosts confidence in the economy
Investors have been preoccupied with nervousness that the economy is slowing down, but United Rentals' first-quarter report gave reason for optimism, and shares gained 8.1% after results beat expectations. Revenue grew 22.1% to $2.12 billion and adjusted earnings per share increased 15.3% to $3.31. Wall Street was expecting the company to earn $3.03 per share on revenue of $2.06 billion.
Top-line growth was driven by a 23% increase in rental revenue, although profitability slipped, with GAAP net income falling 4.4% due to increased interest expense from United's acquisitions last year. Over the last 12 months, the company has repurchased $798 million of its stock, reducing the share count by 6.1%.
United reaffirmed guidance for full-year revenue to grow between 13.7% and 18.7%, with CEO Michael Kneeland saying, "By reaffirming our guidance, we're emphasizing our confidence in the cycle. The year is unfolding as expected -- customer sentiment remains positive, and feedback from the field points to healthy end-market activity."