This morning, Zoom announced that the company will sell around 4.45 million shares in a secondary offering to raise $1.5 billion. As a major beneficiary of COVID-19 outbreaks worldwide, Zoom saw their stock price rise from around $70 at the beginning of 2020 to nearly $570 by late October. Despite experiencing a major dip over the past several months with the rushed release of the COVID-19 vaccine worldwide, Zoom is poised for a major comeback in this secondary offering. With a market cap of nearly $100 billion, Zoom has the ability to turn this influx of capital into possibly several acquisitions that will boost the company’s profitability.
Even though Zoom’s stock price currently holds around $360, it will become a major buy for investors market-wide in the coming months. Since the beginning of 2020, Zoom has still experienced revenue growth of over 350%. Furthermore, by boosting its cash reserves with an additional $1.5 billion, Zoom will give itself the flexibility to become the foremost name in the video communications industry. Over the past year of growth, Zoom CEO Eric Yuan has attempted to diversify Zoom’s capabilities for large enterprises and individuals so the company can grow after COVID-19 is controlled and more workers return to their offices. In its latest earnings report, Zoom still expects sales to grow more than 300% in 2021. Will Zoom be able to dominate the video communications industry with this secondary offering? Can Zoom manage its current pace in 2021, even with hope of the COVID-19 pandemic subsiding? That much will become clear in the following weeks.
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