Zoom founder Eric Yuan speaks before the Nasdaq’s opening ceremony on April 18, 2019 in New York City.
Got Betancur | Getty Images
Zoom said Tuesday it plans to raise $ 1.5 billion in a secondary stock sale, valuing its shares 10 times higher than where it debuted in 2019.
The video chat company, which was a major beneficiary of the remote boom during the Covid-19 pandemic, is assuming a share price of $ 337.71, based on Monday’s close. Zoom went public less than two years ago, selling stock for $ 36 each. It expects to sell approximately 4.4 million new shares.
Zoom is benefiting from a surge in investor interest after its stock increased fivefold in value last year, when the company’s flagship product became a household name. Zoom is already profitable, but the stock sale will complement his balance. In October, the company had $ 730.5 million in cash and cash equivalents, up from $ 283.1 million in January.
Zoom’s stock rally in 2020
With a market capitalization of nearly $ 100 billion, Zoom has the equity to make significant acquisitions.
The secondary sale will provide the capital to combine cash and potentially make deals more attractive to targets. Zoom said it plans to use the money for operating costs and capital expenditures, and “may also use some of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services, or technologies.”
While Zoom’s valuation has increased tenfold since its IPO, the company is significantly below its peak. Since its peak of $ 568.34 in mid-October, Zoom shares are down more than 41%, taking their biggest blow from reports that Covid-19 vaccines were highly effective and would be marketed urgently.
Zoom’s revenue growth was 350% for the past two quarters, and the company said in its latest earnings report in November that its fiscal fourth quarter growth will approach 330%. By mid-year, growth is expected to slow dramatically as the company faces much more difficult comparisons and the likelihood of people returning to the office.
Zoom shares rose 1.6% to $ 343.14 by mid-afternoon on Tuesday.
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