Zoom Video Communications shares tumbled nearly 17% on Tuesday 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’s WebEx, Microsoft’s Teams and Salesforce’s Slack Technologies raked 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 need to find new avenues for growth. The company already made a US$14.7-billion bet on Five9 in July to bolster its contact centre business. Analysts said it 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 $1.02-billion on Monday, indicating a rise of about 31%, compared to multiple-fold growth rates in 2020.

Cut targets

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. — Reported by Aniruddha Ghosh, with additional reporting by Chavi Mehta, (c) 2021 Reuters