5 Day. % ; 1 Month. % ; 3 Month. % ; YTD. % ; 1 Year. %. Zoom Video Communications (ZM %) was one of the hottest growth stocks of The video conferencing platform provider’s stock started. Price of Zoom shares traded on Nasdaq Stock Market in 20(in U.S. dollars).
 
 

Zoom Stock Falls as Revenue Growth Continues to Slow | Barron’s

As of p. Millions of people are using Zoom’s videoconferencing technology to communicate with friends, family, colleagues, students, and teachers during the coronavirus pandemic. And while the service is free for most users, hundreds of thousands of organizations are paying to access enhanced features.

Zoom Video Communications’ torrid customer and revenue growth drove its stock price to a record high on Tuesday. Image source: Getty Images. Moreover, these customers have shown a willingness to pay up to access more of Zoom’s services.

Better still, Zoom is becoming more profitable as it scales its operations. Even as the economy begins to reopen, many people will continue to work and learn from home.

Zoom is helping to make this possible. And despite intensifying competition from the likes of Microsoft and other communication software providers, Zoom continues to sign up new customers at a torrid rate. There aren’t many businesses growing that briskly, and investors are bidding up Zoom’s shares as they scramble to buy a piece of the video conferencing star.

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Europe, where Tesla has just opened a production site, is an important market for the electric vehicle manufacturer and its CEO. It’s certainly understandable; getting more shares of your favorite company can bring a smile to the faces of even the most stoic among us. In , Zoom stock surged. While Zoom stock saw a year-to-date gain of percent in mid-October, by the end of December, this value leveled out at percent. That pullback has investors wondering if Zoom stock will go up again?

As COVID vaccinations began to roll out and investors saw the potential for continued hyper-growth to settle and fade, share prices fell by 37 percent between mid-October and the end of December.

In December, Wall Street analysts raised concerns that Zoom shares were overvalued — even though remote work is likely here to stay. As of mid-January , the price of Zoom stock dipped by around 35 percent. This decline has led to other analysts stating that now is the time to buy. It had and continues to have strong revenue and earnings growth, has been profitable and offers a strong balance sheet.

Due to the events that took place in surrounding the coronavirus, ZM share price blew up. It was as if someone came and threw gas on an already furious fire. That trend was already in place.

Unlike the spike in PPE products, which will not sustain high sales in a pandemic-free world, video conferencing, and now Zoom Phone, are here to stay.

Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources , and more. Learn More. Investor optimism for the videoconferencing company is fueled both by its strong business performance before the coronavirus pandemic and Zoom’s perfect positioning to benefit from the rise of work-from-home trends during the pandemic. The growth stock ‘s torrid rise comes ahead of Zoom’s first-quarter earnings release next week.

Investor expectations going into the report are undoubtedly high. Here’s a closer look at the momentum in Zoom’s business that has prompted such bullish investor sentiment and a preview of the company’s upcoming earnings report.

Zoom demonstrated outstanding business results in its most recent quarter. For its fourth quarter of fiscal , which ended on Jan. The same leverage was true for the company’s full-year results. The company is already generating substantial free cash flow, or operating cash flow less capital expenditures the cold, hard cash left over after regular operations and growth investments are both taken care of.

Since Zoom reported its fiscal fourth-quarter results in early March, management already has some visibility into how a rise in coronavirus cases was impacting its business. CFO Kelly Steckelberg said in the company’s fiscal fourth-quarter earnings call that, as of March 4, it had already seen “significant usage” on its platform due to the coronavirus, and she noted that the company would “expand our capacity to meet the increased demands of both paid and free users.

Kelly, however, did say that much of the significant uptick in usage as a result of COVID was related to free accounts.