Zoom Video Communications Inc shares fell down nearly 17% after the video conferencing company
signalled a faster-than-expected drop in demand and analysts questioned its future plans as people
return to office.
Zoom and other video conferencing services such as Cisco, Microsofts Teams and Salesforces Slack
saw a surge in millions of new users as the pandemic forced people to work, study and communicate
with friends and family remotely.
With easing pandemic curbs, Zoom will have to find new avenues for growth. The company already
made a $14.7 billion bet on Five9 in July to bolster its contact centre business.
It is said that the company would take a few quarters for Zoom to return to its true underlying growth
rate.
“There are significant questions outstanding regarding how new customer demand and customer
churn rates will stabilise in the core business following the loosening of COVID-19 restrictions,”
analysts at Daiwa Capital wrote in a note.
Zoom forecast current-quarter revenue between $1.015 billion and $1.020 billion on Monday,
indicating a rise of about 31%, compared with multiple-fold growth rates in 2020.
At least six brokerages cut their price targets on Zoom, according to Refinitiv data, with Piper Sandler
being the most bearish – slashing its price target by over $100 to $369.
Shares of the company fell by the most in more than nine months to close at $289.50 on Tuesday.
The company’s shares rallied to stratospheric highs since February last year, with its valuation
touching $175 billion in October. Since then, the shares have eased and Zoom`s current capitalisation
is half of the October peak.
