According to Bloomberg News, the selloff in Zoom Video Communications Inc stocks might have gone a bit far. This is the message from other analysts and Benchmark Co’s Matthew Harrigan as they reveal that the video conferencing platform is well equipped and is positioned so that it can function as a hybrid work service provider after the boom in stay-at-home mode. With the stock already cratered by 85% during the 2020 pandemic peak, wiping out approximately $135 billion of market value, they see scope for a rally.
More on Zoom selloff
As per Harrigan, the fixation on Zoom as an aberration of Covid pandemic lockdown is exaggerated as financial firms and global tech recognizes the permanence of hybrid work.
Most major companies are now offering employees to work from home and office. Apple Inc, this month deferred a plan requiring workers to return to the office for three days a week.
All of that matches well for Zoom, which is growing consistently in the key metrics in comparison to other pandemic favorites. Following a 12-fold surge in sales recorded in the last three financial years, analysts anticipate a 12% rise in the first quarter.
Bloomberg News reports that it compares it with Netflix Inc., which was unable to sustain a pull forward for new consumers during the pandemic, and Wall Street was taken by surprise last month with the first drop in the number of subscribers in over ten years.
Analyst of Morgan Stanley Meta Marshall reveals that the quarterly report might catalyze to disapprove of Zoom’s growth, which has overly bearish sentiment.
Backing up the massive bullish sentiment, analysts anticipate that shares will rise 65% to $143.30 in the next year, as per Bloomberg’s data. Whereas it is a far cry from the closing high of 2020, which was recorded as $568.34, it represents a potential return, which is hefty for the purchasing of shares at the current depressed levels. On Friday, Zoom closed at $89.74.
The stock’s valuation is no longer frothy as it used to be once upon a time. San Jose, a company based in California, trades at approximately 25 times forward earnings, which was recorded a drop from 225 times in September 2020.
Zoom’s growth is slowing down with schools and offices reopening in person, and competitors like Salesforce Inc’s Slack Platform, Microsoft Corp’s Teams Software, and Cisco Systems Inc’s Webex increased.
Bloomberg News reports that traders are getting ready for some volatility following the results. The stocks are anticipated to move more than 21% in either direction, which is bigger than the moves seen after the last six quarterly reports have been issued, as per data compiled by Bloomberg.
