# Zoom shares down 90% from peak as pandemic boom fades
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-22
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Zoom Video Communications Inc facing challenges in
Meta Description: Zoom's stock plunges as it struggles in post-COVID world, focusing on business products with slow growth and intense competition.
URL: https://financedigest.com/zoom-shares-down-90-from-peak-as-pandemic-boom-fadeshtml

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By Aditya Soni and Chavi Mehta

(Reuters) – Shares of Zoom Video Communications Inc have tumbled about 90% from their pandemic peak in October 2020 as the former investor darling struggles to adjust to a post-COVID world.

The stock was down nearly 10% on Tuesday after the company cut its annual sales forecast and posted its slowest quarterly growth, prompting at least six brokerages to cut their price targets.

The company, which became a household name during lockdowns due to the popularity of its video-conferencing tools, is [trying to reinvent itself by focusing on businesses](https://www.financedigest.com/5-considerations-when-trying-to-grow-your-business-during-a-pandemic.html "5 Considerations When Trying to Grow Your Business During a Pandemic"), with products such as cloud-calling service Zoom Phone and conference-hosting offering Zoom Rooms.

Analysts, however, say any turnaround in the business is still a few quarters away as growth in its mainstay online [unit slows and competition](https://www.financedigest.com/uks-competition-watchdog-to-examine-edf-buying-ges-nuclear-turbine-unit.html "UK’s competition watchdog to examine EDF buying GE’s nuclear turbine unit") from Microsoft Corp’s Teams and Cisco’s Webex and Salesforce’s Slack gets intense.

GRAPHIC: Zoom’s revenue [growth slows](https://www.financedigest.com/china-nov-export-growth-slows-but-imports-accelerate.html "China Nov export growth slows but imports accelerate") to a crawl – https://graphics.reuters.com/ZOOMVIDEOCOMMN-STOCKS/egpbykjemvq/chart\_eikon.jpg

![Zoom's revenue growth slows to a crawl](https://www.globalbankingandfinance.com/wp-content/uploads/2022/11/chart_eikon.jpg)

Zoom has a fundamental flaw – it has needed to [spend heavily to keep hold of market share](https://www.financedigest.com/cisco-forecast-raise-allays-tech-spending-fears-lifts-shares.html "Cisco forecast raise allays tech spending fears, lifts shares"). Spending to cling onto, rather than grow, market [share is never a good place to be and was a sign of trouble ahead,”](https://www.financedigest.com/shares-steady-dollar-gains-ahead-of-u-s-inflation-data.html "Shares steady, dollar gains ahead of U.S. inflation data") Hargreaves Lansdown equity analyst Sophie Lund-Yates said.

The company’s operating expenses surged 56% in the [third quarter](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter") as it spent more on product development and marketing. Its adjusted operating [margin shrank to 34.6% from 39.1% a year](https://www.financedigest.com/inpost-sees-better-margin-in-poland-plans-no-job-cuts-this-year.html "InPost sees better margin in Poland, plans no job cuts this year") earlier.

Some brokerages believe acquisitions could help revive growth at Zoom, but Chief Executive Eric Yuan said on a post-earnings call that he [continued to see heightened deal](https://www.financedigest.com/volkswagen-strikes-below-inflation-wage-deal-continues-german-trend.html "Volkswagen strikes below-inflation wage deal, continues German trend") scrutiny for new business.

The game is not over for them but without acquisitions this is a multi-year path to [returning to higher](https://www.financedigest.com/investors-seek-higher-returns-as-catastrophe-bond-issuance-slows-during-q2-according-to-aon-study.html "INVESTORS SEEK HIGHER RETURNS AS CATASTROPHE BOND ISSUANCE SLOWS DURING Q2, ACCORDING TO AON STUDY") growth,” Needham & Co analyst Ryan Koontz said.

GRAPHIC: Zoom shares tumble as [pandemic boom](https://www.financedigest.com/uk-house-prices-end-2022-on-a-weaker-note-after-pandemic-boom.html "UK house prices end 2022 on a weaker note after pandemic boom") wanes, competition rises – https://graphics.reuters.com/ZOOM-STOCKS/gdvzqykjlpw/Pasted%20image%201669121283355.png

![Zoom shares tumble as pandemic boom wanes, competition rises](https://www.globalbankingandfinance.com/wp-content/uploads/2022/11/Pasted-image-1669121283355.jpg)

(Reporting by Chavi Mehta and Aditya Soni in Bengaluru; Editing by Anil D’Silva)


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