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Zoom plans $1.5 billion share sale at 10 instances its IPO value

Zoom founder Eric Yuan speaks earlier than the Nasdaq opening bell ceremony on April 18, 2019 in New York Metropolis.

Kena Betancur | Getty Pictures

Zoom mentioned on Tuesday that it plans to boost $1.5 billion in a secondary share sale, valuing its inventory 10 instances above the place it debuted in 2019.

The video chat firm, which has been a significant beneficiary of the distant work increase throughout the Covid-19 pandemic, is assuming a share price of $337.71, based mostly on Monday’s shut. Zoom went public lower than two years in the past, promoting shares at $36 a piece. It expects to promote about 4.4 million new shares.

Zoom is making the most of a surge in investor curiosity after the inventory quintupled in worth final 12 months, when the corporate’s flagship product turned a family title. Zoom is already worthwhile, however the share sale will pad its stability sheet. As of October, the corporate had $730.5 million of money and equivalents, up from $283.1 million in January.

Zoom’s inventory rally in 2020

With a market cap of near $100 billion, Zoom has the fairness to make important acquisitions.

The secondary sale will present the capital to mix money and probably make offers extra enticing to targets. Zoom mentioned it plans to make use of the cash for working bills and capital expenditures, and “may additionally use a portion of the web proceeds for acquisitions or strategic investments in complementary companies, merchandise, companies or applied sciences.”

Whereas Zoom’s valuation as multiplied 10-fold since its IPO, the corporate is considerably off its excessive. Since peaking at $568.34 in mid-October, Zoom shares have dropped greater than 41%, taking their largest hit on studies that Covid-19 vaccines had been extremely efficient and can be rushed to market.

Zoom’s revenue growth has topped 350% in every of the previous two quarters, and the corporate mentioned in its newest earnings report in November that fiscal fourth quarter progress will strategy 330%. By mid-year, progress is anticipated to reasonable dramatically as the corporate has to cope with a lot more durable comparisons and the probability that individuals will probably be returning to the workplace.

Zoom shares rose 1.6% to $343.14 as of mid-afternoon on Tuesday.

WATCH: Zoom and Peloton were winning stocks in 2020

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