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    Home»Sections»Investment»Zoom shares plunge as pandemic boost wanes

    Zoom shares plunge as pandemic boost wanes

    Investment By Agency Staff23 November 2021
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    Shares of Zoom Video Communications slumped to 17-month lows on Tuesday after the video conferencing platform posted its slowest quarterly revenue growth amid stiff competition from deep-pocketed rivals Cisco, Microsoft and Salesforce.com.

    The company on Tuesday posted better-than-expected third-quarter revenue of US$1.05 billion, although that came at a 35% jump compared with an astronomical 360% in the pandemic-hit year earlier.

    “With top-line growth still weighed down by weakening trends in the micro segment from pull-forward and temporary pandemic business, we look for a clear line of sight to the growth trough,” said brokerage Needham.

    The company’s growth at small and medium businesses might be saturating

    Zoom’s addition of new customers with over 10 employees also grew at its slowest pace at 18%, below pre-pandemic levels when the company was not yet a household name.

    The company’s growth at small and medium businesses might be saturating, while it has barely penetrated the large enterprise market, Third Bridge analyst Joe McCormack said.

    However, developing it into a contact centre product will take longer after its $14.7-billion deal to buy call centre software provider Five9 fell through last month.

    Shares of Zoom fell about 14% to $208.15 in early trading. The stock has nearly halved in value since hitting a peak of $114-billion last year as the pandemic raged.

    “For now, investors will need some patience as we do not see any upcoming catalysts that would change the sentiment on the stock,” Evercore analysts wrote in a note.  — Reported by Akash Sriram and Tiyashi Datta, (c) 2021 Reuters

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