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Corona stock market star Zoom is under pressure

W.As an investor before Corona, he already heard something about Zoom, he probably belonged to a small group of investors. But then came the big lockdown in the spring and almost overnight digital communication platforms such as Slack, Teamviewer and Zoom became popular stock favorites on the stock exchanges. They almost stole the show from the established high-tech giants such as the Windows group Microsoft with its chat program Teams or Cisco System with Webex.

The basic version of the Zoom video platform can be used free of charge by anyone. In the Corona lockdown, many did that in the home office – and not only there. Zoom was booming in the private sector. Family reunions, church services, school lessons, and recreational courses were held over it.

However, if you – such as companies – want to use Zoom more professionally and with more additional functions, you have to pay for it in different subscription models. More and more companies are doing this and are using offers such as those from Zoom in their everyday business. In Germany alone, according to the digital association Bitkom, the proportion of companies that want to pursue a strategy to cope with digital change has risen significantly this year. Namely from 68 percent in 2018 to 75 percent in 2020.

In terms of internal and external communication, companies will rely much more heavily on digital channels in 2020. Video conferencing with the help of Zoom, Skype or GotoMeeting also increased significantly and, according to a Bitkom study, is used extensively by 61 percent of companies – only 48 percent were in 2018.

Strong competition

Zoom itself had over 370,000 corporate customers at the end of August. The company was able to acquire more than 100,000 new customers in the second quarter. The balance sheet for the second quarter of 2020 ultimately also reflected the success of the company: a sales increase of 355 percent and a net profit of 166 million dollars.

For the third quarter, Zoom had forecast sales of up to 690 million dollars in early September. For the entire 2020/2021 financial year (as of the end of January 2021), the group expected revenues of 2.4 billion dollars in September. Should the company actually publish these figures at the end of November when it publishes its balance sheet or “only” confirm its annual forecast, this would mean one thing clearly: The rapid growth of Zoom would come to an end for the time being and the company would have its hands on the strong one Competition in the field of video chat platforms, expanding its customer base in the business area and thus keeping the balance sheet. Some investors would wonder what the long-term share is all about. Is the hype over (again)?

A look at the chart is exciting in this context: After the IPO in April 2019, the share initially developed disappointingly, as the prices only fluctuated sideways until January 2020. But in the wake of the outbreak of the corona pandemic, the video conferencing provider’s share started a steep price rally in February of this year.

Zoom Video Communications


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To the detailed view

The share price increased more than sevenfold in the following eight months and hit a new record high of around $ 589 in mid-October. After the soaring, a sharp correction of around 30 percent to at times 413 dollars followed by mid-November. But despite the sharp setback, the stock is still trading a large margin of around 60 percent above the 200-day line ($ 256), so the long-term upward trend is still intact.

It is now also exciting to see what numbers Zoom will publish at the end of November. If the numbers for the market are good, the prices could soon start another price rally and the October all-time high of $ 589 would be in focus again. Based on the current price level, up to this level alone there would be a catch-up potential of 43 percent and the Zoom share would once again be a prime example of a digitization winner.

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