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Amid The Coronavirus Rout, Zoom Video Stands Out As A Lone Performer


03/18/2020


Amid The Coronavirus Rout, Zoom Video Stands Out As A Lone Performer
Amid the rout in the global financial markets because of the coronavirus pandemic, Zoom Video Communications has stood out among the crowd.  There has been a 20 per cent growth in the stocks of the company over the past month even as the S&P 500 has plunged by almost 30 per cent.
 
Actually the very coronavirus pandemic that has brought in woes to almost all other companies has helped Zoom to boost its performance.
 
With the rapid spread of the virus pandemic all across the world, a large number of companies have asked their employees to stay back and work from home. This decision was taken by the companies following a recommendation of from the World Health Organization sometime that recently declared the coronavirus to be a pandemic. Since then there has been a surge in the number of companies across the world that have advised – and some have made it mandatory, for employees to work from home in order to prevent the spread of the pandemic. For example, all of the 119,000 employees of Google in North America have been asked to work from home.
 
Similar advises have also been issued to their employees globally by the likes of Facebook and Amazon, provided their job profile allows such remote working. Other companies to make such arrangements include Microsoft, Apple and Twitter. Apart from these large tech companies, there are also many medium and small sized companies that have also mandated work from home measures for their staff to prevent further spread of the pandemic.
 
This has increased the importance of the s video teleconferencing services and collaboration tools as offered by the likes of Zoom, enabling remotely placed workers to connect and hold meetings remotely.
 
This has caught the attention of investors too. 
 
So far this year, there has been a 58 per cent surge in the shares of Zoom while the S&P was down 26 per cent in the same time period. However, a prominent market analysts believes Zoom stock still has more room for growth despite the stock growing by 62 per cent in the past three months alone.
 
A Buy rating on Zoom stock with a $140 price target was issued by Richard Valera, analyst at Needham.
 
“We think Zoom’s exceptionally easy to use meetings product has both enabled and benefited from a long-term secular shift towards working from home,” Valera wrote in a research note. “We think Covid-19 is driving an enduring acceleration of this shift. In the near-term, our checks confirm significant increases in business activity, especially in Covid hotspots, which admittedly could be mitigated by delays in closing larger enterprise deals.”
 
For investors who have been late in identifying the potential for Zoom, that is good news.
 
The company also struck a good public relations move by removing the limits on the free use of its video conferencing services during the height of the pandemic crisis. However there are concerns that the infrastructure of the company could be under pressure because of this gesture of goodwill and that the company’s profits could be hurt as well. This is because the company is yet to spruce up its capacity to meet the demand. 
 
(Source:www.nasdaq.com)