Zoom shares soared during the pandemic.
Dreamstime
Zoom Video Communications on Tuesday filed with the SEC to sell $1.5 billion of common stock.
The video-conferencing software company’s shares have been on a wild ride over the past year, as it has been a prime beneficiary of the work-from-home trend. Zoom’s (ticker: ZM) stock rallied more than 760% from where it closed out 2019, at $68.04, to its intraday peak of $588.84 on Oct. 19. But since then it has slid about $250, or more than 40%, in less than three months.
The decline in Zoom’s share price reflects growing concerns about stepped-up competition from deep-pocketed rivals like Cisco Systems (CSCO), RingCentral (RNG) and Microsoft (MSFT), as well as worries about how much the company’s growth will slow as the economy reopens.
During the pandemic, at least, Zoom has continued to produce spectacular growth—for the fiscal third quarter ended Oct. 31, it posted revenue of $777.2 million, up 367% from a year ago. For the fiscal fourth quarter ending in January, Zoom is projecting revenue of $806 million to $811 million, with non-GAAP profits of 77 to 79 cents per share. Wall Street consensus calls for $814.4 million in revenue and profits of 80 cents per share.
Prior to the offering announced today, Zoom had about $1.87 billion in cash and marketable securities, and no long-term debt.
J.P. Morgan Chase (JPM) is sole underwriter for the offering.
Zoom said proceeds from the offering will be used “for working capital and general corporate purposes, including sales and marketing activities, research and development activities, general and administrative matters, repayment of debt, other business opportunities and capital expenditures.”
Separately, Zoom announced on Tuesday that it has reached 1 million users for Zoom Phone, the company’s cloud-based telephony service.
Zoom shares were nearly flat in midmorning Tuesday trading, down 6 cents to $337.65, while the S&P 500 was up 0.2%.
Write to Eric J. Savitz at [email protected]
