Why Zoom Stock Zoomed on Wednesday

Shares of videoconferencing star Zoom Video Communications (NASDAQ: ZM) continued living up to their name Wednesday, zooming 5% through 2 p.m. EST as investors continued to digest a pair of big news items from yesterday.

Zoom announced Tuesday that it plans to raise $1.5 billion in new capital from the sale of about 4.2 million new shares of its stock. Because Zoom will be diluting shareholders with this offering, you'd expect this news to depress the shares. Instead, the stock jumped 5.7% on Tuesday. But even a $1.5 billion share issuance only dilutes existing shareholders by about 1.4%, so it's not really a big hit.

This morning, Zoom -- citing higher demand -- increased the offering to $1.75 billion, with 5.1 million shares sold (still only about 1.6% dilution).

Source Fool.com