Zoom founder, Eric Yuan, speaks before the Nasdaq opening ceremony on April 18, 2019 in New York City.
Got Betancur | Getty Images
Zoom said on Tuesday it plans to raise $ 1.5 billion in a secondary share sale, valuing its stock 10 times higher than where it first appeared in 2019.
The video chatting company, which has been one of the main beneficiaries of the telework boom during the Covid-19 pandemic, is Assuming a share price of $ 337.71, Based on Monday close. Zoom became public less than two years ago, selling stocks in $ 36 a piece. It expects to sell about 4.4 million new shares.
Zoom is benefiting from increased investor interest after the stock quintupled in value last year, when the company’s flagship product became a household name. Zoom is really profitable, but selling the stock will load its balance sheet. As of October, the company had $ 730.5 million in cash and cash equivalents, up from $ 283.1 million in January.
Zoom stock soars in 2020
With a market cap of close to $ 100 billion, Zoom has the potential to make large acquisitions.
The secondary sale will provide capital to pool the cash and possibly make deals more attractive to targets. Zoom said it plans to use the funds for operating and capital expenditures, and “may also use a portion of the net proceeds for acquisitions or strategic investments in business, products, services or complementary technologies.”
While the Zoom rating has multiplied 10-fold since its initial public offering, the company is far from its highs. Since peaking at $ 568.34 in mid-October, Zoom shares have fallen more than 41%, receiving the biggest impact on reports that Covid-19 vaccines have been very effective and will be brought to market.
Zoom in Revenue growth Exceeding 350% in each of the past two quarters, the company said in its latest earnings report in November that its fiscal fourth quarter growth would approach 330%. By the middle of the year, growth is expected to slow significantly as the company has to deal with tighter comparisons and the likelihood of people returning to the office.
Zoom shares were up 1.6% at $ 343.14 as of mid-afternoon Tuesday.