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Zoom plans $1.5 billion share sale at 10 times its IPO price

Zoom under Eric Yuan speaks before the Nasdaq opening bell ceremony on April 18, 2019 in New York City.

Kena Betancur | Getty Perceptions

Zoom said on Tuesday that it plans to raise $1.5 billion in a secondary share sale, valuing its usual 10 times above where it debuted in 2019.

The video chat company, which has been a major beneficiary of the God-forsaken work boom during the Covid-19 pandemic, is assuming a share price of $337.71, based on Monday’s close. Zoom went business less than two years ago, selling shares at $36 a piece. It expects to sell about 4.4 million new divide ups.

Zoom is taking advantage of a surge in investor interest after the stock quintupled in value last year, when the presence’s flagship product became a household name. Zoom is already profitable, but the share sale will pad its balance paper. As of October, the company had $730.5 million of cash and equivalents, up from $283.1 million in January.

Zoom’s stock gather in 2020

With a market cap of close to $100 billion, Zoom has the equity to make significant acquisitions.

The secondary sale purpose provide the capital to combine cash and potentially make deals more attractive to targets. Zoom said it designs to use the money for operating expenses and capital expenditures, and “may also use a portion of the net proceeds for acquisitions or strategic investments in complementary corporations, products, services or technologies.”

While Zoom’s valuation as multiplied 10-fold since its IPO, the company is significantly off its high. Since plus ultra at $568.34 in mid-October, Zoom shares have dropped more than 41%, taking their biggest hit on recounts that Covid-19 vaccines were highly effective and would be rushed to market.

Zoom’s revenue growth has clipped 350% in each of the past two quarters, and the company said in its latest earnings report in November that fiscal fourth abode growth will approach 330%. By mid-year, growth is expected to moderate dramatically as the company has to deal with much tougher point of agreements and the likelihood that people will be returning to the office.

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

Care for: Zoom and Peloton were winning stocks in 2020

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