Zoom Shares Fall 11% After Slowing Growth

Zoom shares plunged more than 11% in pre-market trading after the video conferencing company pointed to a faster-than-expected drop in demand and analysts questioned its future plans as more people return to their offices.

Zoom and other conferencing platforms, such as Cisco, Microsoft’s Teams, and Salesforce’s Slack, have seen massive growth in their user bases with millions of new users after the pandemic crisis forced people to work, study and connect with friends and family remotely.

But with the easing of pandemic restrictions, Zoom will need to find new ways to grow, as analysts expect it will need several quarters to return to its basic growth rates, and Zoom is reported to have bet about $14.7 billion on Five9 last July to boost its call center business. Read more [Zoom Buys Call Center Operator Five9 For $15 Billion].

Zoom expects revenue for the current quarter to range between $1.015-1.020 billion, which means that it will achieve a growth of only 31% compared to the multi-fold growth rates witnessed during the year 2020, this reduced the company’s stock price target by at least four brokerages, with Piper Sandler being the most pessimistic at a $100 discount from the stock price target to $369, this reflected negatively on the performance of Zoom stock in the market, to be on its way to achieving its worst day in 9 months, after falling to $307.5 in pre-market trading.

Since February of last year, Zoom shares have skyrocketed, raising the market value with it to approximately $175 billion in October, but since that time its share has declined significantly, and if the stock maintains the current loss, the market value of Zoom will become half of what it was in October.

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