Zoom was one of the Nasdaq-100’s biggest stars in 2020, with a 400% rise. At $340 per share, the stock is currently very high, and some fear that the price will fall as more people get vaccinated against Covid-19 and return to work. Is Zoom a strong investment in 2021? Read our buy Zoom stock forecast and review.
We’ve seen the emergence of so-called “Covid stocks” in 2020, which are businesses that benefited greatly from the pandemic. This includes a variety of programs that make remote working more convenient as well as entertainment and shopping during the lockdown. Zoom, Netflix, Slack, Roku, Shopify, and Docusign are some of the best examples.
The Origin of Zoom
Eric Yuan, the chairman, and CEO of Zoom Video Communications, Inc., founded the company in 2011. Stanford University was the company’s first B2B customer. The video conferencing network had one million users by 2013. It became a unicorn startup in 2017, with a market capitalization of $1 billion (£732 million, €821 million), though it didn’t make a profit before 2019.
Zoom went public in April 2019, and after only one year of trading, its market capitalization had risen to $16 billion. San Jose, California is home to the company’s headquarters.
Biggest Year of Zoom stock
Zoom became indispensable when hundreds of millions of people adapted to working and learning from home. Simply put, it’s the most well-known video conferencing app in the world, and its success in 2020 has been nothing short of phenomenal.
Zoom added 2.2 million new users in January and February alone. As the corona crisis was already unfolding more than in the entire year of 2019. The app grew from 10 million regular meeting attendees in December 2019 to 200 million in March and 300 million in April.
Zoom’s sales rose as well: in fiscal Q1 2021 (Zoom’s fiscal year runs 12 months ahead of the calendar year). The app took in $328.2 million, up from $122 million the previous year. It had a 355 percent year-over-year increase in Q2 of $663.5 million, which was more than the entire fiscal year of 2020. It again outperformed analysts’ estimates in the third quarter, earning $777 million, up 367 percent from the previous quarter. The revenue outlook for Q4 is between $806 million and $811 million. A slight decrease from previous quarters but still 330 percent higher than the previous year.
Zoom share price
The influence of such rapid growth in audience and sales on the stock price has been immense. Zoom (ZM) began the year with a market capitalization of $16.1 billion and a share price of $68.7 (just $3 higher than the IPO price). By March 1, the price had risen to $114 and had continued to rise until October, when it peaked at $568.
As the second pandemic wave intensified and risk-off sentiment prevailed. Zoom and several other tech stocks plummeted in the final week of October. On November 9, another crash occurred when Pfizer confirmed that its Covid vaccine was 90% successful.
Zoom stock price forecast 2021: opportunities & threats
Let’s begin with a fast fundamental Zoom stock prediction. The question on many investors’ minds now that Covid-19 vaccines have begun in many countries is, “Will we all be back in the office soon?”. If that’s the case, would ‘Covid stocks’ fall as a result?”
In reality, since the majority of the working population would take a long time to get vaccinated. The return to normalcy does not pose a significant short-term risk to Zoom. So far, the vaccine has only been provided to over-60s. In the coming days, it will be available for medical staff, office workers, and students. They are the majority of Zoom’s users and are the last to receive it. Until 2021, video conferences will be a part of our everyday lives.
Why is Zoom stock falling?
Zoom’s stock has dropped more than 10% in the last week. It is now down 26% from its 52-week peak. Its output is similar to that of many other stocks for stay-at-home moms. The stocks of Peloton Interactive (PTON) and Teladoc (TDOC) have dropped 14 and 24 percent in the last week. They are now 30 and 28 percent below their pandemic highs. Shopify, Roku, and Slack, which are selling themselves to Salesforce, are among the other stay-at-home stocks that have declined.
The fall in ZM stock over the last week coincided with the approval of a third vaccine. In the race to contain the pandemic, as well as reports that a single dose of Pfizer’s vaccine is still highly successful.
Zoom’s earnings estimates
Zoom is also being scrutinized by investors ahead of its earnings release. After the markets close on March 1, the videoconferencing company will release its fourth-quarter earnings. Analysts expect earnings per share of $0.79 and revenue of $811.7 million on average. Zoom posted $0.15 EPS and $188.3 million in sales in the fourth quarter of 2019, exceeding analysts’ expectations of $0.07 and $176.5 million, respectively.
Investors concerned about Zoom’s stock outlook and buy zoom stock trend to be overlooking the company’s attempts to adapt its operations for the post-pandemic period. Zoom management is aware that some of the benefits obtained as a result of the pandemic may fade as life returns to normal.