The rebirth of the former YouTube competitor Vimeo has just got the long-awaited phase of its “spin-off” with IAC and its IPO in full swing. The first 48 hours of Vimeo at NASDAQ, which has become a B2B service platform for the production of video content, did not have the expected success.
Despite being 17 years old, Vimeo has encountered the same set of obstacles as a young, growing public company. The change in the strategy for the business model (since 2017) means that the company must invest heavily, especially in the acquisition of other companies, in order to be able to achieve its goals.
Vimeo lost up to 16% on the first trading day on Tuesday. On Wednesday, late afternoon trade still pushed its price down 5% in New York. However, the valuation hit $ 8 billion when it was valued at $ 2.75 billion in anticipation of going public in December 2020.
Why Vimeo sees a drop in prices
Vimeo therefore sold 15% of its price when it went public, but the results aren’t that bad. The New York-based company’s record is far from disappointing, and the split from the IAC Group (which also owned Match Group when it went public in July 2020) went smoothly.
The current correction is more in line with earlier financial results the company released for the remainder of the year. Vimeo operates in a very competitive market where players must pursue their investments on a large scale to survive. Consequence: Growth has to slow down.
“We’ll always be looking for M&A opportunities, and everything will range from new technology, institutional knowledge, intellectual property that we don’t already have, to incredible people and talent. We have always used mergers and acquisitions as further leverage for growth and will do so when it makes sense, ”commented Anjali Sud, CEO of Vimeo, since her strategy reversal in 2017.
The company’s growth reached 57% in the first quarter of 2021, thanks to increased sales and an already very complete model to offer companies SaaS tools for video hosting, statistics, including production services. Expectations for the second quarter are 40% and for the rest of the year it is 30%.
It will be necessary to wait until 2022 for Vimeo to accelerate “while this year’s investments are starting to show results,” said its CFO Narayan Menon.