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Why Zoom Video Communications Was Down on Monday | The Motley Fool

What happened

Zoom Video Communications (NASDAQ:ZM) was trading down by over 2% in late afternoon action on Monday. This followed the announcement of the video conferencing specialist’s latest acquisition.

So what

On Sunday, Zoom announced that it has signed a definitive agreement to acquire cloud-based contact center software developer Five9 (NASDAQ:FIVN). Zoom said the transaction is valued at $14.7 billion. Thankfully the tech company’s owner-to-be won’t have to feverishly raise cash for the deal, as it’s being effected entirely in Zoom stock.

Image source: Zoom Video Communications.

“Enterprises communicate with their customers primarily through the contact center,” Zoom CEO Eric Yuan said. “We believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers.”

Zoom is touting the complementary nature of the Five9 acquisition, claiming that it will present cross-selling opportunities (both for its own customer base and that of Five9 as a unit) when paired with its Zoom Phone offering. 

Now what

The boards of directors of both Five9 and Zoom have approved the buyout deal. It is subject to approval by the latter’s shareholders. Zoom said the purchase should close in the first half of calendar 2022.

As is common with big-ticket buys, the share price of the acquirer is slumping on the news while the acquired company’s is rising (by almost 6%, at last glance). What might also be concerning Zoom investors is the company’s lack of a forecast on how Five9 might affect its financials and operations.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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