ZM Shares Up 2% After Zoom Raises $1.75B in Capital

Friday 15 January 2021, 12:46 AM AEST - 1 week ago

Zoom saw a significant uptick in its user base and revenue in 2020 driven by the boosted demand in video communications as most people worked from home in the heat of the coronavirus pandemic.

The shares of American video communications service provider Zoom Video Communications Inc (NASDAQ: ZM) is seeing a good bounce following a new capital raised by the San Jose-based firm. As reported by the Motley Fool, the firm announced Tuesday that it plans to raise $1.5 billion in new capital from the sale of about 4.2 million new shares of its stock, a figure that was surpassed to $1.75 billion owing to an increase in demand, the company said. The latter capital raised was based on the sale of 5.1 million of its shares.

The deal looks good for Zoom as it now has more financial liquidity to push for product and services expansion. Tom Roderick, an analyst with Stifel Financial Corp (NYSE: SF) said that the capital boost will propound Zooms financial flexibility but the overall cap will have to be much higher in a bid to drive corporate expansions.

While [the company now has] a sizable war chest, the cash alone doesnt necessarily put potential targets like RingCentral or Twilio on the table without a huge component of stock in such a deal, he wrote. As Zoom builds out its global scale, a 10-figure war chest of cash will also be beneficial for aggressive infrastructure build-out, as needed.

Zoom shares closed 2.19% higher to $364.63 per share on Wednesday with an additional 1.75% boost in todays pre-market. Zoom reportedly has no long term debt positions and Roderick has a $450 price target on the stock with a hold rating.

Zoom saw a significant uptick in its user base and revenue in 2020 driven by the boosted demand in video communications as most people worked from home in the heat of the coronavirus pandemic. Although the competition has soared in recent times, the prospects of Zoom outperforming cannot be ruled out

Upbeat in Zoom Shares As its Zoom Phone Service Hits 1 Million Users

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