Quote: "ZoomInfo Technologies (ZI) said Tuesday [8/3] that certain selling stockholders, including investment funds affiliated with TA Associates, The Carlyle Group, and 22C Capital LLC and an entity affiliated with the company’s co-founders intend to offer for sale, in an underwritten secondary offering, 20 million shares of the company’s Class A common stock.
Morgan Stanley is acting as the underwriter for the offering.
Shares were down marginally in the after-hours session."
Just to be clear on this, it’s not the company selling stock. It’s a secondary for two of the big shareholders (TA and Carlyle).
Together, they own about $11 billion (roughly $5.5 billion each) so this offering is them liquidating about 10% of their stakes.
ZoomInfo is not raising any money. It’s just a huge block sale.
They upsized to 27 million shares (don’t know the price yet), which I normally would say represents 6.7% dilution based on the 405 million weighted average shares outstanding that ZI reported in their Q2 earnings release.
And maybe it’s just that simple…
However, ZI has a broad set of outstanding shares at the Class C and Class A levels and has 4 pages in their 10-Q (see “Note 13 - Earnings Per Share…” dedicated to covering their calculations here, and it’s a dizzying mix that I don’t fully understand. Perhaps it doesn’t matter, but I wanted to point it out in case someone on the board has a better understanding.
Nevertheless, if you take 405+27=432 million shares × ~$55/share you get a $23.76B market cap for ZI.
Their debt - cash is unremarkable, so for simplicity, their EV/S (TTM) after dilution would be 23,760/590.4 = 40.24
There are plenty of compares that could made here, but one such compare of similar revenues is Cloudflare and their EV/S (TTM) is currently ~75
Apologies. The secondary offering is non-dilutive as fish13 points out.
Therefore, the correction is simply 405 million shares × ~$55/share you get a $22.28B market cap for ZI and an EV/S (TTM) of ~37.73
Still have questions about the outstanding shares calculation per the earlier post.
This turns out to be a bargain for any of us wanting to increase our stake. The closing price Monday was $54.80. On yesterday morning (after earnings) the price was up about 11-12% at $60.80. This for a stock which had barely moved in months.
Then these VC’s decided to sell some shares (remember that this is no dilution). They priced the shares, after expanding to 27 million (showing high demand), at a price of $55.25.
The customers of Morgan Stanley who were getting the shares but didn’t know anything about the company pre-sold the shares they were getting (sold short) yesterday and this morning, and gave us a gift. I was able to add to my position of this $60.80 stock at $55.50 in the pre-market today. What a gift!
Best,
Saul
I learned a valuable, but opposite, lesson. ZI has been on my watch list for months. Their beat and raise pushed me from watch to own. I bought an [initial] position in the pre-market, at elevated rates, and now know it would have been much smarter to take my time.
Is there an art of “when” to launch, post a quarterly report that helps you cross to the “own” side?
Very happy to own long term, but just wish I’d avoided the unnecessary premium I now need to overcome.
Here there be tygers! The lesson you learned is not valuable! Market timing at the micro level like this is not realistic for most individual investors. You’d have to be plugged in with pretty laser-like focus to take advantage of the very short-term difference in entry price between Saul’s add and yours. To my mind, that’s strictly the domain of the best professional investors/traders and only a small handful of vigilant long-timers (like Saul).
It’s only my take of course, but you beat yourself up thinking you paid a premium when you didn’t know about it at the time. Just do the best you can with the information you have at the time, and own your decisions in the comforting that there will always who bought and/or sold at a better price than you did. Investing the Saul Way and following general Foolish principles optimize your chance at both beating the market over the long term and sleeping well at night along the way.
To answer the bolded question above, it sounds like you’re asking about whether there’s a science to it, rather than an art. All I do is remember that the best time to buy any stock is always some time in the past when the price was lower. Learning to live with the reality (forgive the semantic liberty here) that the second-best is at the confluence of (a) your confidence the stock’s fit with your available goals and (b) having the cash available. Timing, ESPECIALLY at the hour-to-hour or day-to-day level, is virtually meaningless in the long run, except to folks interested in a ‘measuring contest’. Again, there’s always someone who did better than we did. I bought a second “third” of ZI this morning without thinking about it being “worth” $60.80 because that’s what it’s basically worth NOW. I try buy stocks based on what they’re going to be worth in 3-5 years or more, and as you might have heard, whether you bought at $55 or $60 isn’t going to matter a whole lot when the price is north of 3 bills at some point.
Probably just me, but I think winning in investing is about meeting all of your goals, not about beating others’ performance. Envy and regret are just two ways to waste emotional space.
-n8
No it’s a really diluted SPO
ZoomInfo Technologies S-3 Filing Shows Registration For 11.5M Share Common Stock Offering Issuable Upon Exchange, Settlement Of Equity Interests
Just wandering why a company with that strong cash making business needs those many money? Do an another big acts? Looking forward to it!
Have a great weekend
Rick