by Nicholas Schade ‘23
Up until a recent spike in Covid-19 cases from the Omicron Variant, Zoom’s stock value had been steadily decreasing for several months. On August 31, its stock value dropped 17 percent, or around $60, and is down around 44.5 percent overall this year. While these lowered stocks could hint at a blip in Zoom’s buildup, expect the company to remain popular for years to come.
Zoom’s decline in stock is to be expected, as other companies that grew during Covid-19 are also experiencing similar retractions. Stationary bike producer Peloton saw its stock lower by 35 percent in one September trading session, while online education provider Chegg dove 50 percent in another session on November 2. As the Omicron Variant prolongs the coronavirus pandemic by several months such a trend could also just as easily reverse.
Revenue-wise, Zoom is still going strong but at a slower rate. In the second quarter of the fiscal year, which stretches from April to June, Zoom reported that it had earned $1.02 billion, a $63.8 million-increase from the end of the previous quarter in March. However, in the third quarter, which goes from July to September, Zoom reported its revenue to be $1.05 billion. While still a $30 million increase from June, it is the lowest increase Zoom has experienced in years, signifying that the company’s growth has reached a current peak.
Even after both offices and schools opened up during the fall, many companies still keep Zoom services as an alternative form of communication. In a recent international survey conducted by Zoom on the presence of virtual work and communication in the future, 64 percent of respondents from the United States indicated that they would be open to attending business meetings both in-person and virtually. Fifty percent of U.S. respondents also said that they would prefer the use of a hybrid learning model in schools.
Seeing its popularity with businesses, especially large enterprises, Zoom has worked to expand its services in recent months. In late February Zoom introduced a feature that allowed companies to hire virtual receptionists through its app, who could work from miles or countries away. In July Zoom also released a full new platform, Zoom Events, that gives companies the ability to create hubs and public homepages for all of their virtual meetings in which events with multiple connected meetings for networking can be hosted. Organizers can also host internal events within their meetings like sales summits.
However, Zoom has had some setbacks in its expansion. On July 19 it proposed a merger with Five9, a company which automates customer contact for businesses through the internet. The merger was supposed to be all-stock all-cash, where Five9 shareholders would sell most of the company’s shares to Zoom for a premium, a higher price than they usually sold at on the stock market, as well as receiving .55 of a Zoom share for every Five9 share they sold. However, the merger was terminated on September 30, after shareholders became disgruntled that the prices they would receive for their shares was too low, and that the Zoom stock they would receive had already depreciated 28 percent in value since the initial deal was struck.