Zoom founder Eric Yuan speaks ahead of the Nasdaq opening bell ceremony on April 18, 2019 in New York City.
Kena Betancur | Getty Images
Zoom said on Tuesday that it plans to raise $ 1.5 billion in a secondary share sale, which will value its share ten times higher than where it will debut in 2019.
The video chat business, which was a major beneficiary of the boom in remote work during the Covid-19 pandemic, is accepting a share price of $ 337.71, based on the close on Monday. Zoom was known less than two years ago and sells shares at $ 36 each. The company expects to sell approximately 4.4 million new shares.
Zoom is taking advantage of the increase in investor interest after the stock increased fivefold last year, when the company’s flagship product became a household name. Zoom is already profitable, but the share sale will improve its balance sheet. As of October, the company had $ 730.5 million in cash and equivalents, compared to $ 283.1 million in January.
Zoom shares collapse in 2020
With a market capitalization of nearly $ 100 billion, Zoom has the capital to make significant acquisitions.
The secondary sale will provide the capital to combine cash and possibly make transactions more attractive to the targets. Zoom said it plans to use the money for operating expenses and capital expenditure, and “may also use a portion of the net proceeds for acquisitions or strategic investments in ancillary businesses, products, services or technologies.”
While Zoom’s valuation has multiplied ten times since the stock market, the company is significantly lower. Since peaking at $ 568.34 in mid-October, Zoom shares have fallen more than 41%, with their biggest success in reports that Covid-19 vaccines are very effective and will rush to market word.
Zoom’s revenue growth has increased by 350% in each of the past two quarters, and the company said in its latest earnings report in November that fiscal growth in the fourth quarter will reach 330%. By the middle of the year, growth is expected to slow dramatically, as the company will have to deal with much stricter comparisons and the likelihood of people returning to the office.
Zoom shares rose 1.6% to $ 343.14 on Tuesday afternoon.
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