Yet another Zoom risks more stock confusion with ZoomInfo debut
Investors could face more name confusion this week when ZoomInfo Technologies Inc. joins Zoom Video Communications Inc. on the Nasdaq Stock Market.
ZoomInfo, which provides data on sales prospects, is expected to price its initial public offering on June 3 and begin trading under the ticker symbol ZI the following day. It will join three other publicly traded companies globally whose names begin with Zoom, the most well-known of which is the maker of video-conferencing software that has become a household name during the coronavirus pandemic.
The surging popularity of Zoom Video, used daily by millions of people for remote face-to-face interactions, has fueled a three-fold rally in its stock this year. But for a brief time, it caused even bigger spikes in the shares of Zoom Technologies Inc, a Beijing-based company with few operations to speak of. That stock traded under the symbol ZOOM and had been moribund for years before Zoom Video’s IPO in April 2019 helped revive it.
”The challenging part is we’re just running out of names that are distinctive,” said A.J. Ericksen, corporate partner at Baker Botts, in an interview. “So you’ll get some that sound alike and it gets even worse when you start with tickers – which was a big problem with Zoom Technologies. The retail investors start typing in Zoom’ and get that.”
ZOOM’s daily volume soared from about 30,000 shares on April 10, 2019, to nearly 1 million shares eight days later, while the stock price rose about five-fold over three trading days. Things were quieter until the coronavirus started to spread rapidly across the U.S. this spring, sparking a surge in Zoom video chats and sending shares of its doppelganger up more than 10-fold.
That volatility captured the attention of the Securities and Exchange Commission, which halted trading in Zoom Technologies for two weeks on March 25. The regulator cited concerns about ticker confusion and a lack of public disclosures since 2015. Ultimately Zoom Technologies changed its ticker symbol from ZOOM to ZTNO.
“I think it’s just going to be left to buyer beware,’” Ericksen said.
Of course, ZoomInfo has little in common with Zoom Technologies aside from its name. The Vancouver, Washington-based company has about 202,000 paying users, $293 million in revenue last year and is backed by Carlyle Group, according to a filing.
It’s unclear whether Zoom Corp., a Japanese seller of video and sound recording devices, has also benefited from name confusion. Its stock rallied to a four-month high in April but has since fallen about 14%.
Meanwhile, Zoom Video shares continue to chug higher. The stock has gained 27% since Friday, when it was added to the MSCI World Index. On Tuesday, the company nearly doubled its annual revenue forecast after a blowout first quarter in which customers with more than 10 employees jumped 354% compared with the same period a year ago.