Daily Brief: Zoom Announced Its Biggest Call Yet, And It’s Costing The Company A Pretty Penny

Daily Brief: Zoom Announced Its Biggest Call Yet, And It’s Costing The Company A Pretty Penny

over 2 years ago3 mins

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Zoom Video Communications on Monday announced its biggest get-together yet: the ubiquitous teleconferencing provider is buying cloud computing firm Five9 for a cool $15 billion.

What does this mean?

Zoom shot to prominence during the pandemic as work-from-homers, far-off friends, and locked-down lovers all turned to its slick video-calling service. And Zoom’s revenue shot up too, more than quadrupling last year compared to 2019.

But with people now able to meet more in person, some investors are worried Zoom’s growth could, like the online quiz, become a thing of the past. That might be why Zoom’s first major takeover target is a cloud software provider that helps other companies run their online customer support operations – the sort of business that’s booming regardless of pandemic restrictions. The global “contact center” industry is worth $24 billion and counting – and joining forces should help both Zoom and Five9 better compete with large rivals like Amazon, Cisco, and RingCentral.

Contact center market size

Why should I care?

For markets: An expensive call.

Zoom’s stunning 2020 saw its share price soar fivefold – and the company’s taking full advantage of this to fund its purchase of Five9. The “all-stock” deal will hand Five9’s current investors shares of Zoom instead in a swap that values the cloud company around 13% above what it was worth before the deal was announced. That may not sound like much – but it equates to more than 200x Five9’s forecast earnings this year.

Pandemic Zoom

Zooming out: Game on.

The Zoom news wasn’t the only merger deal announced on Monday. Italian fashion house Ermenegildo Zegna is listing shares in the US via a “reverse takeover” – while Chinese tech giant Tencent, the world’s biggest video game publisher, is continuing its foreign spending spree by buying UK game developer Sumo for $1.3 billion. That’s an achievement-unlocking 44% premium to the latter’s share price last week.

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Sustainable Investment Hit A Record $35 Trillion Last Year

Green image

As people wake up to the need for better stewardship of our planet, financial and otherwise, the dollars are pouring into sustainable investment – but the euros are a different matter.

What does this mean?

A report out this week from the Global Sustainable Investment Alliance reveals that the amount of money sustainably or responsibly invested across the world’s biggest financial markets hit $35 trillion in 2020. That figure isn’t just 50% higher than in 2016 – it also means that over a third of all professionally managed investments in North America, Japan, Australasia, and Europe are now targeting social or environmental goals.

Financial data giant Bloomberg reckons that global levels of sustainable investment could rise to $53 trillion by 2025. But some places are pulling their weight more than others: while sustainably invested assets increased 42% in the US between 2018 and 2020, they actually fell 13% in Europe.

​​Global Push

Why should I care?

The bigger picture: Details matter.

European sustainable investment may have shrunk by $2 trillion over the last couple of years, but that isn’t down to wilting investor enthusiasm. On the contrary, red-hot demand for green investment has led to an ever-expanding range of products – and in the process created fertile ground for misrepresentation. Anti-“greenwashing” rules introduced by the European Union have therefore tightened up the definition of “sustainable” investment – and many funds have been reclassified as a result.

For markets: Going against the grain.

Individual companies can be guilty of greenwashing too. That was the charge leveled against plant-based milk brand Oatly last week by an activist investor betting on its newly public stock price sinking. Short-seller Spruce Point Capital Management claims that Oatly overstated both its financials and its sustainability credentials in the build-up to its stock market launch in May – and the company’s shares have fallen 10% since the accusations emerged.

Oatly stock
Source: Google Finance
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