Technology
Zoom shares plunge 90pc from Covid pandemic peak
The company's operating expenses surged 56% in the third quarter
Shares of Zoom Video Communications Inc have tumbled about 90% from their pandemic peak in October 2020 as the former investor darling struggles to adjust to a post-COVID world.
The stock was down nearly 10% on Tuesday after the company cut its annual sales forecast and posted its slowest quarterly growth, prompting at least six brokerages to cut their price targets.
The company, which became a household name during lockdowns due to the popularity of its video-conferencing tools, is trying to reinvent itself by focusing on businesses, with products such as cloud-calling service Zoom Phone and conference-hosting offering Zoom Rooms.
Analysts, however, say any turnaround in the business is still a few quarters away as growth in its mainstay online unit slows and competition from Microsoft Corp's (MSFT.O) Teams and Cisco's (CSCO.O) Webex and Salesforce's (CRM.N) Slack gets intense.
"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," Hargreaves Lansdown equity analyst Sophie Lund-Yates said.
The company's operating expenses surged 56% in the third quarter as it spent more on product development and marketing. Its adjusted operating margin shrank to 34.6% from 39.1% a year earlier.
Some brokerages believe acquisitions could help revive growth at Zoom, but Chief Executive Eric Yuan said on a post-earnings call that he continued to see heightened deal scrutiny for new business.
"The game is not over for them but without acquisitions this is a multi-year path to returning to higher growth," Needham & Co analyst Ryan Koontz said.
SOURCE: REUTERS
-
Pakistan 1 day ago
PM Shehbaz suggested reaching out to Imran Khan, India
-
Pakistan 2 days ago
CM Punjab gives Rs2.5mn cheque to family of guy hit by her protocol convoy
-
Pakistan 1 day ago
NA Committees: Framework ready for power sharing between govt, opposition
-
Sports 1 day ago
Pak vs NZ: Muhammad Rizwan, Irfan Khan ruled out of T20I series
-
Regional 1 day ago
Trump’s team keeps promising to increase inflation
-
Pakistan 2 days ago
Punjab govt approves ‘Apna Ghar’ project
-
Pakistan 1 day ago
PML-N office burning case: Sanam, Dr. Yasmin, others summoned for indictment
-
Technology 13 hours ago
Qualcomm strong-arms its way into Windows laptops this summer