Question

Stock Market Valuation and Success - IPO

Zoom Video Communications Inc. has been very successful in the market, especially after recently going public. Zoom Video Communications Inc is a technology company that provides video conferencing software over the internet (Konrad, 2019). The demand for the zoom app prompted the company to raise its IPO price to $36 per share, which valued the company at $9.2 billion (Konrad, 2019). The first day there was a 72% boost which capped the Zoom market cap at $15.9 billion. The company has a annual revenue in 2018 of 151.48 million, and a 2019 revenue of 331 million after a 118% boost after the IPO debut (Konrad, 2019). Zoom valued their IPO correctly turning the business from a million dollar business to billion dollar business.

After the IPO debut Zoom boasted 50,000 of their corporate customers, which includes Samsung, Uber, Walmart, and Capital One (Konrad, 2019). Because Zoom shares started out at $0.005 per share before the IPO, when the IPO was raised to $36 share and closed on their debut day at $62 per share, investors who invested $1000 in Zoom shares nearly made $550,000 (Konrad, 2019). Due to company already been seen as a solid investment, once news spread of the company going public, the heavy investor interest is what drove the prices up. Although the debut price for Zoom was very high in March this year, it has since fallen 25%, someone looking to invest in Zoom stock should beware.

For Chegg: explain whether you agree or disagree with the above assessments of my Selected IPO. Can you identify additional economic and market factors that may have influenced the results of the IPO?

Answer 1

Yes totally agree

The additional economic and market factors are:-

• Demand for video conferencing technology all over the world
• Corporate demand for video conferencing app
• Free of cost accessibility
• Scheduling of meetings accessibility in the software app
• Increasing internet users worldwide- leading to increase in demand for such apps
• Increased awareness
• Want of people to communicate with ease