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What happened
Videoconferencing specialist actions Focus on video communications (NASDAQ: ZM) collapse today.
Decline comes following COVID-19 vaccine announcement Pfizer and BioNTech prevented more than 90% of infections in human trials involving tens of thousands of volunteers. In addition, no serious security issues have been identified.
Some investors are betting stocks that benefited from putting people in the home may now calm down if the lockdowns ease amid a successful vaccine rollout.
Image source: Zoom Video Communications.
So what
Zoom has been one of the biggest beneficiaries as consumers and protected home workers. People turned to the platform to collaborate virtually, resulting in skyrocketing revenues and profitability.
For the three-month period ending July 31, Zoom announced a 355% increase in revenue year over year. Out of $ 664.5 million in revenue, the company reaped $ 373.4 million in free cash flow. This amount was up from free cash flow of $ 17.1 million in the last year quarter.
Given that the growth stock has soared over 500% this year, it’s no surprise to see stocks sell off as investors speculate on a return to higher normalcy in 2021 and beyond.
Now what
Management said in its third quarter update that it expected even higher revenue in the fourth quarter. The company led for record revenue of between $ 730 million and $ 750 million during the period.
While a slowdown in Zoom’s growth should be expected as the economy reopens, it is unclear both how quickly vaccines can be rolled out to the masses and how much the company’s growth will slow down. . Before the pandemic, Zoom was already booming at near triple-digit growth rates.
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