Society’s coronavirus pain has been Zoom Video’s gain.
Zoom’s stock (ticker: ZM) was among the top gainers on the Nasdaq on Monday, as the market shrugged aside broader economic concerns to rebound resiliently from last week’s mini-slump. The teleconferencing platform spiked 9% on the day, well ahead of other top Nasdaq gainers like Tesla (+6%) and Electronic Arts (+3.7%). It was up a further 1.7% in premarket trading on Tuesday.
With huge swaths of the American workforce now in their fourth straight month of working from home amid the coronavirus pandemic, Zoom’s video communications software has experienced an unprecedented surge in use. That’s boded particularly well for the company financially; in its most recent quarterly earnings report earlier this month, Zoom reported a 170% increase in revenues year-on-year amid an influx of new customers.
In turn, the company’s stock has been among Wall Street’s biggest success stories this year. Having started 2020 trading at less than $69 per share, Zoom closed at just over $239 per share on Monday—a 248% jump from the beginning of the year. Its market capitalization now stands at more than $67 billion; as Michael Batnick, co-host of the Animal Spirits podcast, noted on Twitter, Zoom’s stock is remarkably close to surpassing none other than Goldman Sachs in value.
Zoom is among a slew of technology companies to have outperformed on the market this year, thanks to abrupt changes in consumer habits caused by the coronavirus pandemic. Whether its home entertainment providers like Netflix (+29% in 2020), digital payments platforms like PayPal (+42%), or other teleworking software solutions like Citrix (+26%), some firms have managed to make the most of the unprecedented circumstances.
But that outperformance does come with a tradeoff. It’s likely no coincidence that Zoom’s rally Monday came amid more news of a spike in COVID-19 cases in parts of the U.S., as well as a new outbreak in China that’s forced Beijing to impose fresh lockdown measures.
With the end of the pandemic not yet in sight, it appears the market is bracing for a prolonged “new normal” that some companies are better equipped to meet than others. That may not be good news for most of us, but for firms like Zoom, it’s proving an opportunity.
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