In a post-Covid world, Zoom Video Communications Inc. shares have lost approximately 90 per cent of their value since the pandemic peak in October 2020.
The business lowered its annual sales projection and reported its slowest quarterly growth, which led at least six brokerages to lower their price targets, and the stock was down over 10 per cent on Tuesday.
The business is attempting to reinvent itself by focusing on businesses with products like the cloud-calling service Zoom Phone and the conference-hosting offering Zoom Rooms.
The company, which became a household name during lockdowns due to the popularity of its video-conferencing tools, is trying to reinvent itself.
Analysts predict that any business revival will take a few more quarters as the growth of its core online business slows and competition from Microsoft Corp.’s Teams, Cisco’s Webex, and Salesforce’s Slack increases.
Hargreaves Lansdown equity analyst Sophie Lund-Yates said, “Zoom has a fundamental flaw – it has needed to spend heavily to keep hold of market share. Spending to cling onto, rather than grow, market share is never a good place to be and was a sign of trouble ahead.”
Due to increased spending on product development and marketing, the company’s operational expenses increased by 56 per cent in the third quarter.
Some brokerages believe acquisitions could help Zoom recover its growth. However, Chief Executive Eric Yuan stated on a post-earnings call that he continues to observe more deal scrutiny for new business.
(with inputs from agencies)