The Zoom stock has been on a rollercoaster ride. Driven by its strong 2020 results, the stock soared on Wednesday. On Thursday, however, a retracement arrived. Why? Because investors are wondering whether Zoom has a future after the pandemic.
Rise of Zoom and its stock
Zoom is a video-calling app whose popularity exploded at the same time as the Coronavirus pandemic. Lockdowns, remote learning and smart working have accelerated the use of video conferencing apps, and Zoom has distinguished itself in this respect.
That’s why in 2020 it will boast rising revenues, up 326% to $2.65 billion. In the last quarter of the year, Zoom can boast total revenue of $882.5 million, up 369% from the same period last year.
Eric S. Yuan, founder and chief executive officer of Zoom, said:
“The fourth quarter marked a strong finish to an unprecedented year for Zoom. In FY2021, we significantly scaled our business to provide critical communications and collaboration services to our customers and the global community in response to the pandemic. We are humbled by our role as a trusted partner and an engine for the modern work-from-anywhere environment. Our ability to rapidly respond and execute drove strong financial results throughout the year”.
The future, according to the CEO, will also be bright:
“As we enter FY2022, we believe we are well positioned for strong growth with our innovative video communications platform, on which our customers can build, run, and grow their businesses; our globally recognized brand; and a team ever focused on delivering happiness to our customers”.
These figures propelled the stock on Wall Street, which jumped nearly 10 per cent in one day to $409.66. The following day (March 2nd), Zoom’s stock first touched $437 and then began a rapid decline to $343 at the time of writing.
Driving this decline is investor uncertainty about Zoom’s future. Indeed, some analysts fear that the app could be affected by the end of the pandemic, when the Covid vaccines succeed in bringing the long-awaited herd immunity.
Then there is the competition aspect to consider. Microsoft Team, for example, is improving many aspects of its app by launching new features that promise to compete with Zoom.
Probably at the end of the pandemic, remote learning is destined to remain a memory, while smart working may remain, albeit to a lesser extent. This will help keep Zoom alive and vibrant, it remains to be seen whether at the level investors expect.