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Zoom stock declined last December as a result of positive news on an effective coronavirus vaccine. What impact will further vaccine progress have?
At the peak of the pandemic and people were forced to stay indoors, Zoom Video Communications Inc (NASDAQ: ZM) recorded significant increases in its stock. In 2020, the video communications provider surged over 400% as several people resorted to virtual meetings in the absence of in-person meetings at offices. There was an increase in Zoom users as many avoid physical meetings due to the coronavirus pandemic.
Zoom European users recently had challenges accessing the video communication app on their desktops and mobile phones. However, a report by the communications technology company said that the issue had been resolved:
“We have resolved the issue causing a subset of users in Europe to be unable to sign in to the native desktop and mobile Zoom clients.”
Despite the rise in Zoom users, investors are concerned that the company may not continue to pull in gains due to the development of the coronavirus vaccine. The vaccines are expected to return the usual normalcy to the world. Office workers would return to their offices, and there would be a lesser need for virtual meetings.
Zoom stock declined last December as a result of positive news on an effective coronavirus vaccine. The company’s stock has also plunged in the last three months. Zoom fell 30.70% in the last three months.
Data by Marketwatch further revealed that ZM stock is up 421.27% over the past year. In its year-to-date record, the company has grown by 16.76% and has also gained 2.50% over the past month. In addition, ZM jumped 16.63% over the last five days. At press time, Zoom stock is up 0.04% to $394.02 in the pre-market.
Zoom Secondary Stock Offering
On the 12th of January, Zoom announced plans to secure $1.5 billion in a secondary stock offering. According to a CNBC report, Zoom hopes to sell about 4.4 million new shares in the secondary offering.
The report further revealed that Zoom has $730.5 million of cash and equivalents. This is an addition of about $447 million to $283.1 million recorded in January.
As stated in the CNBC report, Zoom will use the raised funds from the secondary offering for operating expenditures. The company added that it “may also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services or technologies.”
Notably, Zoom’s valuation has jumped about ten times since its initial public offering (IPO) in 2019. The company currently boasts of a market capitalization of $111.96 billion.
Furthermore, a tech expert at Info-Tech Research Group, Carmi Levy, said that Zoom and Peloton need to evolve to sustain their continuous increases.