On this date 20 years ago, Pixar held its initial public offering on the NASDAQ. Pixar’s IPO on 11/30/1995 came on the heels of Toy Story’s initial release a week earlier on 11/22/1995. Before I delve into the details surrounding its IPO, let me give a brief history of pre-IPO Pixar.
In 1979, Ed Catmull was hired by George Lucas to head Lucasfilm’s new venture called Graphics Group, which would later be purchased by Steve Jobs and renamed ‘Pixar’. John Lasseter, the creative mastermind behind all of Pixar’s works, joined the Graphics Group in 1983. The Graphics Group released The Adventures of André & Wally B in 1984, which was their first computer-animated short. In 1985, the Graphics Group created the stained glass knight scene for the film Young Adventures of Sherlock Holmes. Steve Jobs purchased the Graphics Group division of Lucasfilm in 1986 and renamed it ‘Pixar’ (condensed version of ‘pixel art’). Pixar released the short films Luxo Jr., Red’s Dream, Tin Toy, and Knick Knack in 1986, ’87, ’88, and ’89, respectively. In 1991, Disney and Pixar agreed to create and distribute at least 1 computer-animated feature length film, a plan which would finally come to fruition in 1995 with the release of Toy Story.
The monstrous success and popularity of Toy Story (which was No. 1 at the box office at the time) proved to be the perfect catalyst for Pixar stock on the day of its IPO, as shares of the animation firm opened at $47, more than double their offering price of $22, and closed at the price of $39. With a first-day closing price of $39, Pixar commanded a market cap of about $1.5 billion. At the time of its IPO, PIXR had 37.4 mm shares outstanding, with Steve Jobs owning 29.9 mm of those shares. For the 9 months ended 09/30/1995, Pixar had made a profit of $3.1 mm on revenue of $10.6 mm. Pixar’s valuation is reminiscent of both modern day software firms and the multitudinous internet companies of the dotcom bubble, with investors valuing interesting ideas and possibilities of huge future profits over the cash flow of the present.