According to a new regulatory filing, Salesforce has sold all of its 2.8 million Zoom shares after it invested $100 million in the video-calling company's IPO last year.
When Salesforce invested in the company in 2019, its plans looked a little different. “Our goal is to be long-term investors,” said John Somorjai in 2019, who is also Salesforce’s Executive Vice President of Corporate Development.
Zoom went public at $36 a share in April 2019. Stocks jumped 267% this year as the coronavirus pandemic led to surging demand. Salesforce likely received between $317 million and $705 million, depending on when it sold its shares. As a result, its return on investment was probably between 200% and 600%.
This year, Zoom became synonymous with the global pandemic. Engagement surged in March as more people across the world relied on the video-conferencing service to stay in touch with co-workers, educators, family, and friends. Soon enough, Zoom became one of the top-performing stocks of 2020.
While Zoom has become ubiquitous with video conferencing, the company recently came under fire for weaknesses in the encryption keys of its service.
It was found that during multiple test calls in North America, keys for encrypting and decrypting meetings were transmitted to servers in Beijing, China. Zoom admitted that it had “mistakenly” allowed calls to flow through China, adding to a number of missteps that raised doubt on the platform’s security. In response, the company announced that it will halt direct sales to customers in mainland China beginning August 23.
Salesforce Ventures, the SaaS giant’s investment arm, has invested in many cloud software companies in recent years, including Dropbox, Lyft, SurveyMonkey, and Twilio, though its only remaining public holding is in SurveyMonkey. Salesforce unloaded its 2.2 million remaining shares of Dropbox earlier this quarter. Notably, it also recently slashed its stake in SurveyMonkey by more than 70%, to around 376,000 shares.
Having a prominent investor divest all its shares is not a great sign for Zoom. However, it’s worth noting that by definition, Salesforce Ventures’ strategy is to invest in early-stage start-ups and cash out when the price is right. When it comes to Zoom, there’s no time like the present.