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Zoom's shares have soared in 2020 as the popularity of its video conferencing service has grown during a time of widespread lockdowns aimed at stemming the spread of the coronavirus pandemic. (Photo: Bloomberg)

Zoom seeks to raise US$1.5B through new stock offering

Zoom's shares have soared in 2020 as the popularity of its video conferencing service has grown during a time of widespread lockdowns aimed at stemming the spread of the coronavirus pandemic. (Photo: Bloomberg)

Zoom Video Communications Inc is seeking to raise $1.5 billion through a stock offering, capitalising on surging demand for the video-conferencing platform during the pandemic.

Zoom said in a statement Tuesday it expects to give its underwriter a 30-day option to buy as much as an additional US$225 million of Class A stock at the public offering price, excluding underwriting discounts and fees. JPMorgan Chase & Co is the sole book runner for the sale.

Zoom’s videoconferencing service is deepening its integral role in life during the coronavirus pandemic as tens of thousands more businesses and other users pay for subscriptions to get more control over their virtual meetings. (AP Photo/Mark Lennihan, File)

The new shares will start trading January 13, people familiar with the matter said, asking not to be identified because they aren’t authorised to speak publicly. The stock dropped about three per cent in trading before markets opened in New York.

Zoom has gained 362 per cent in the past 12 months, reflecting the demand it has seen as people work, learn and socialise on their computers. The stock has become a barometer of the pandemic economy, rising when COVID-19 lockdowns emerge and falling on good news about vaccines. Chief Executive Officer Eric Yuan has tried to diversify Zoom’s capabilities for large enterprises, small and mid-sized businesses and individuals so the company can grow after the coronavirus is controlled and more workers return to their offices.

Founder of Zoom Video Communications Inc Eric Yuan (Photo: Bloomberg)

In Zoom’s latest earnings report, it suggested that revenue growth in 2021 may be slightly less explosive than it was last year. Still, Zoom said it expects an increase in sales of 330 per cent in the current quarter, which ends in January.