ZipRecruiter (ZIP  ) was up nearly 35% following its IPO in late May. The company's stock opened at $20, above its pre-IPO price of $18, and has trended higher since then. Due to the weakness in growth stocks, many IPOs in recent weeks have struggled, although market conditions have improved over the past week.

Like a lot of recent IPOs, ZipRecruiter went public through a direct listing rather than the traditional IPO process. The advantage to this is that it saves a considerable amount of time and money, while the drawback is the risk of no institutional support which can cause weakness in the first few months of trading.

Company Profile

ZipRecruiter's current stock price of $24.66 gives it a valuation of just above $3 billion and helping the company raise more than a billion dollars. ZipRecruiter actually was forced to cut its IPO price from $25 to $18 to ensure sufficient demand.

ZipRecruiter was founded in 2010 by Ian Siegel, Joe Edmonds, Ward Polous, and Will Redd. The company has grown by aggressively spending on marketing and touts its AI abilities to better match applicants with jobs. Initially, it started off with a feature that it would cross-list any job postings on other job boards.

Currently, ZipRecruiter has over 1,000 employees and offices. In total, it raised $219 million. As of May 2021, it had 1.5 million businesses posting their jobs on the platform and 450 million job seekers all over the world.

In Q1, the company reported revenue of $125.4 million, an 11% increase from last year, and net income of $13.4 million. In Q2, ZipRecruiter expects revenue between $157 million and $163 million which would be a 25 to 30% increase from 2020's Q2. For the full year, ZipRecruiter sees revenue between $580 million and $600 million which would represent growth of 39% to 44%.

Stock Market Outlook

ZipRecruiter is an interesting stock as it's not too expensive like many IPOs. It will also benefit from the economy's reopening as job listings are a leading indicator of improving economic growth. Many businesses are already complaining about the difficulty of finding workers. If ZipRecruiter's algorithm can successfully help them find workers, then it makes sense that business will boom.

Additionally in its prospectus, ZipRecruiter states that currently, only 6% of recruiting takes place online at the moment. The company sees its AI as operating as a virtual recruiter.

However, many don't buy that ZipRecruiter's AI is exceptional as online reviews are mixed on its efficacy. Investors should remain patient with ZipRecruiter. Direct listings tend to be very volatile, and there's little reason to believe that ZipRecruiter will be an exception.