Zoom Video's 85% Selloff Has Analysts Calling for a Rally
The selloff in Zoom Video Communications Inc.’s stock may have gone too far.
That’s the message from Benchmark Co.’s Matthew Harrigan and other analysts, who say the video-conferencing company is well positioned as a hybrid work services provider after riding the stay-at-home boom. And with the stock having cratered almost 85% from its 2020 pandemic peak, wiping out about $135 billion of market value, they see scope for a rally.
“The fixation on Zoom as a Covid pandemic lockdown aberration is exaggerated as global tech and financial firms recognize the permanence of hybrid work,” Harrigan said in a note to clients previewing first-quarter results that are due for release after US markets close on Monday.
Most major companies now offer employees the flexibility to work both from the office and from home, though even that has faced challenges due to rising Covid cases in many countries. Apple Inc. this month delayed a plan to require workers to come back to the office three days a week. Credit Suisse Group AG Chief Executive Officer Thomas Gottstein said he doesn’t think banks will ever return to working full-time from the office.
All of that bodes well for Zoom, which unlike some pandemic darlings is still showing growth in its key metrics. After a more than 12-fold rise in sales in its last three fiscal years, analysts expect a 12% increase in the first quarter.
Compare that with Netflix Inc., which wasn’t able to sustain a massive pull forward in new customers during the pandemic and shocked Wall Street last month with its first decline in subscribers in over a decade.
Analysts like Harrigan think Zoom’s product offerings can make it a post-Covid winner as more employees seek flexible work arrangements.
“I think the Street is
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