The US Securities and Exchange Commission (SEC) has stepped in to address a case of mistaken identity which has seen investors put money into a little known Chinese tech firm, Zoom Technologies, in the mistaken belief that it is behind the Zoom, the video conferencing app which is going through the roof as a result of coronavirus working from home rules
In a statement the US regulator said that the public interest and the protection of investors required a suspension of trading in the securities of Zoom Technologies, which goes by the ticker name ‘ZOOM’.
The SEC said this was in response to concerns about investors confusing this issuer with a similarly-named NASDAQ-listed issuer, providing communications services, which has seen a rise in share price during the ongoing Covid-19 pandemic.
The regulator also flagged up concerns about the adequacy and accuracy of publicly available information concerning ZOOM, including its financial condition and its operations, if any, in light of the absence of any public disclosure by the company since 2015. ZOOM is a Delaware corporation that reported in 2014 having its principal executive offices in Beijing, China.
As a result of the SEC intervention, shares in ZOOM are suspended from 26 March to 8 April.
Zoom Video Communication, which floated in April 2019, currently has a market capitalisation of $45bn.
Revenues in the financial year ending 31 January 2020, were more than $622m, up from $330m a year earlier and $151m in fiscal 2018.
It is forecasting revenues of at least $905m for this financial year, an increase of around 45%, and has seen a massive spike in demand following the outbreak of coronavirus and the need for large numbers of people to work from home.
While Zoom Video shares have gone up more than 30% in the last five weeks, Zoom Technologies’ shares have seen an even bigger rise, even though its market valuation is only $31.3m.
