Zoom stock slumps 6% after the video-conferencing group announces a $1.5 billion stock offering

Zoom CEO Eric Yuan, center, celebrates the opening bell at Nasdaq as his company holds its IPO, Thursday, April 18, 2019, in New York. The videoconferencing company is headquartered in San Jose, Calif.

Summary List Placement
Zoom’s stock price dropped as much as 6% in premarket trading on Tuesday, after it announced a $1.5 billion share offering.
The video-conferencing group hasn’t set a date yet, saying the stock sale remains “subject to market and other conditions.”
Zoom’s $1.5 billion target suggests it will issue about 4.3 million shares, or around 1.5% of its outstanding shares.
The software group likely wants to make the most of its 400% stock rally in 2020 and add some cash its coffers.

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Zoom shares slid as much as 6% in premarket trading on Tuesday after the video-conferencing group announced it will sell $1.5 billion of its stock in an underwritten public offering.

The software company didn’t provide a date for the offering, saying it was “subject to market and other conditions.”

Zoom has appointed JPMorgan as the sole underwriter. It plans to grant the investment bank a 30-day option to purchase an additional $225 million of its shares at the offering price, before underwriting discounts and commissions.

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The $1.5 billion target suggests Zoom could issue about 4.3 million shares, based on its stock price at the close of trading on Monday. That would represent around 1.5% of its outstanding shares.

Zoom is likely seeking to capitalize on its breathless stock rally last year and bolster its cash reserves. Its share price surged about 400% in 2020, boosting its market capitalization to around $100 billion, as the pandemic fueled demand for its video-conferencing software.

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The group’s revenue ballooned by 310% to $1.8 billion in the nine months to October 31 last year, boosting its net income from $10 million to $412 million.

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Source:: Businessinsider – Finance

      

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