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HubSpot shares jump 20% after IPO

Wall Street had its worst day of the year on Thursday, but Cambridge-based marketing software company HubSpot had a strong debut on the stock market after raising $125 million Wednesday in its initial public offering.

On its first day of trading, HubSpot closed at $30.10 per share, a 20 percent rise over its IPO price of $25. The company raised $125 million in a sale of 5 million shares for $25 each. Despite hitting $32 shortly after the opening bell, HubSpot’s shares fell to $30 by noon, where it remained throughout much of the day.

HubSpot’s closing price valued the company at $914 million.

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The market as a whole fell sharply, however, just one day after its largest rise of the year. The Dow Jones industrial average plunged 334 points on Thursday as a decline in energy stocks and worries about the global economy sent investors fleeing out of the market. It was the biggest point drop since June 2013.

It was also the third straight day investors have been taken on a wild roller coaster ride. On Tuesday the Dow fell 272 points, only to jump 275 points on Wednesday. While 100-plus point moves in the Dow have become more common as stocks have risen to record highs, 200-plus point moves had been rare until this week. More than half of this year’s 200-point moves have happened in the last two weeks.

The VIX, a measure of volatility that is sometimes called Wall Street’s ‘‘fear index,’’ jumped 26 percent to its highest level since February.

Still, HubSpot executives said they were embolded by their company’s strong performance.

“It’s such a great outcome,” said J.D. Sherman, the company’s chief operating officer. “To launch the company like this on the New York Stock Exchange, makes it feel like a victory.”

HubSpot was founded in 2006 by Dharmesh Shah and Brian Halligan, graduates of the Massachusetts Institite of Technology. The company sells several software products that help companies draw customers by using social media and blog posts instead of traditional methods of reaching out, such as direct mail and mass-media advertising. The company’s founders call their approach “inbound marketing.”

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The company has been a hit with the local tech and marketing scenes. An annual conference hosted by the company in September at the Boston Convention and Exhibition Center drew more than 10,000 attendees. HubSpot’s top executives have said they intend to stay in Boston, saying they want the company to be an “anchor” for tech talent.

“This is big for Boston,” Shah said. The company’s strong performance would be good for the city, he said, and encourage “more entrepreneurs” and “more startups” to settle in Boston.

Since its creation, HubSpot has received investments from notable venture capital firms, including General Capital Partners and Matrix Partners. Its price at its initial public offering was higher than the $22 to $24 range previously estimated.

In its prospectus to investors, the company said it had grown at a rapid pace in recent years and had 11,500 customers is 70 countries. HubSpot makes money by charging companies subscription fees to use its platform, and made an average of $8,800 per customer per year over the first six months of 2014. Although it made $51.3 million over that period, the company has never made a profit, and its net losses totaled $17.7 million in the first half of the year.

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According to CB Insights, which researches startup companies and investors, HubSpot is the fourth Boston-area tech company to complete an IPO this year. Wayfair, an online retailer of home goods, raised $319 million in its IPO last week.


Jack Newsham can be reached at jack.newsham@globe.com. Follow him on Twitter @TheNewsHam. Dennis Keohane of the Globe staff contributed to this report.