💻 Zoom's $1.75B stock sale

Wednesday, January 13, 2021 by Robinhood Snacks | Disclosures

"Welcome to ZWork"

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Hey Snackers,

Yesterday, the House passed a resolution to encourage Vice President Pence to invoke the 25th Amendment to remove Trump — after Pence said he wouldn't. The House impeachment vote will happen today.

While major stocks barely budged, the Russell 2000 index — which tracks 2K smaller publicly traded US companies — hit a record high. Investors are betting on more stimulus and an economic recovery, which could turn the tide for small(er) biz.

Sell
1. Zoom looks to raise $1.75B with a new share sale — but why?

If it's a verb... It needs no intro. Flashback to December 2019: WFH days are a rare perk, masks are for spa days, and Zoom stock is trading at $65. Flashforward to October 2020: WFH is a meme-ified norm, masks are for all days, and Zoom stock is trading at $560. Oh, and its quarterly profit has increased 3,300% from 2019.

  • But Zoom has been kind of muted lately... Now that Covid-19 vaccines are being administered, shares have fallen to $357. And Zoom wants to cash in before it's too late.
  • Zoom plans to sell 5M+ new shares to raise $1.75B in fresh cash. Since more shares are being introduced, Zoom stockholders will own less of the overall company — that dilutes the value of exisiting shares.

Conference FOMO... Zoom hasn't cashed in on its soaring share price yet. When you buy a company's stock, the company isn't getting your dollars. The $$$ goes to the random other investor you bought the stock from (just like when you sell, it goes to you). But these new share sales are kind of rare for public companies (though Tesla has announced two this year), because no one wants dilution. So why is Zoom doing this now?

THE TAKEAWAY

Zoom could be gearing up to invest... in a "return-to-work" hedge. Zoom doesn't have a cash problem: on October 31, it had $1.9B in cash, according to its latest earnings. So this share sale isn't a needy cash grab. Zoom is the ultimate WFH stock - that's both its greatest strength and its greatest vulnerability. Now it could be gearing up to invest in (or even acquire) a "return-to-normalcy" hedge. We're thinking it should launch a remote co-working space called ZWork.

Cool

If a mailbox had a baby with a WiFi-connected Igloo cooler... you'd get HomeValet. This "smart cooler" chills on your doorstep, waiting for the grocery delivery so you don't have to. Walmart's partnering with the startup behind HomeValet for a grocery delivery pilot in Bentonville, Arkansas (aka: Walmart HQ).

  • Secure & contact-less: Only you and the delivery guy/gal can unlock the box.
  • Temp-controlled: Three temperature zones — refrigerated, frozen, and room temp (for the Nutella).
  • Phone-controlled: Set your HomeValet to 0° F straight from the app.
  • Disinfecting: Bacteria-crushing UV lights sanitize your eggplant.

Walmart isn't famous for its e-nnovation... but it is famous for groceries. Walmart = largest grocer in the US. This partnership with HomeValet could give it an innovative edge against techy Instacart and Amazon. In fact, Walmart customers will be the first to gain access to HomeValet boxes (they haven't even dropped yet).

THE TAKEAWAY

Prime goes wide, Walmart+ goes deep... into grocery. Makes sense, since groceries account for over half of Walmart's sales. ICYMI: Walmart+ is the $98/year Amazon Prime rival. Prime offers everything from free shipping, to video, to Music, and yes... grocery delivery. But Walmart+ has one major selling point: free unlimited grocery delivery. HomeValet could level up Walmart's grocery by expanding perks.

What else we’re Snackin’
  • Swabbed: The US will require all international passengers to show a negative Covid-19 test before boarding US-bound flights.
  • Future: GM shares hit a record high after the OG carmaker unveiled an insane-looking electric van and potential plans to delve into flying cars.
  • Cruise: Carnival expects a net loss of $2.2B for its fourth quarter, but says it ended the year with $9.5B in cash.
  • Shack: Shake Shack's quarterly sales finally grew after several quarters of declines — but same-store sales in Manhattan plunged 49%.
  • Vax: The Trump admin is reportedly issuing guidelines to expand Covid vaccine eligibility to anyone 65 and over.
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Wednesday

Authors of this Snacks own shares of: Walmart

ID: 1477357

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