Zoom expresses plans of a £1.10 billion secondary share sale

Written by: Wajeeh Khan
January 12, 2021
  • Zoom expresses plans of a £1.10 billion secondary share sale.
  • The American company prices its shares at £247.42 apiece.
  • Zoom might use the capital from the share sale to fund acquisitions.

In an announcement on Tuesday, Zoom Video Communications Inc. (NASDAQ: ZM) said it will launch a secondary share sale to raise £1.10 billion. The technology company priced its shares at £247.42 apiece, that is roughly ten times the per-share price at which it debuted on the Nasdaq Stock Exchange in 2019. As per Zoom, the announced stock offering will entail roughly 4.4 million new shares.

Zoom shares were reported about 2% down in premarket trading on Tuesday but gained nearly 8% later in the day. Including the price action, the stock is now exchanging hands at £262.25 per share versus a high of £416.40 per share in October. Learn more about how to invest in the stock market.

Zoom had £535.20 million of cash and equivalents in October

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

The ongoing Coronavirus pandemic turned out to be a blessing in disguise for Zoom last year as companies from all over the world resorted to work from home arrangements, boosting demand for video chat. With the new variant of the flu-like virus continuing to disrupt businesses, the San Jose-based company is likely to benefit in the upcoming months as well.

In January 2020, Zoom had reported £207.41 million of cash and equivalents – a figure that jumped to £535.20 million in October. As per the experts, the announced share sale is likely to further bolster the balance sheet of the video communications company that is already profitable.  

In a report published in November, Zoom recorded an unprecedented 367% annualised growth in revenue in the fiscal third quarter.

Tip: looking for an app to invest wisely? Trade safely by signing-up with our preferred choice, eToro: visit & create account

Zoom might use the capital from the share sale for acquisitions

Zoom is currently valued at close to £75 billion – a strong enough position to opt for significant acquisitions. The capital boost from the stock offering will further help it propose lucrative deals to targets. According to Zoom:

“The capital from the share sales will primarily be used for capital expenditures and operating expenses. Zoom might also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services, or technologies.”

The news comes only a month after the U.S. company had expressed plans of expanding its presence in Singapore.

Zoom performed massively upbeat in the stock market last year with an annual gain of roughly 400%. At the time of writing, the Nasdaq-listed company has a price to earnings ratio of 245.97.