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Zoom video conferencing stock more than doubles in three months

Video conferencing app, Zoom Video (NASDAQ: ZOOM) stock price has jumped by 110% over the last three months, driven by the shift to working from home with expectations that demand will continue to increase even after coronavirus outspread eases. Initially founded by Eric Yuan (pictured, centre) in 2011, an engineer at Cisco Systems’ teleconferencing business, Zoom has now achieved a market capitalization of almost $41bn and its daily US active users volume hit a new all-time high of 4.8 million this week. The active users of video conferencing app grew 151% year-on-year in March.

While Zoom’s stock price has already topped JPMorgan and Needham’s stock price targets, the user growth data and other financial matrices support further growth.

Zoom video conferencing stock...

The demand for Zoom is set to remain robust in April and beyond, as lockdown periods imposed by governments seem likely to be lengthy,  said JPMorgan analyst Sterling Auty claims. “Zoom’s demand to continue even after the pandemic eases since companies will want to be prepared to handle disruptions in the future,” Sterling Auty said.

Zoom stock price has already crossed JPMorgan’s target of $150; Zoom stock price notched an all-time high of $160 in trading last week before retreating to $145 range on privacy leakage concerns.

Meanwhile, Needham’s analyst Richard Valera believes Zoom is well set to sustain 40% annual revenue growth over the next five years. Thr firm had generated 78% year over year revenue growth in the fourth quarter of 2019. Also, the market analysts expect the business to beat the first-quarter revenue guidance of $199-$201m and a full-year outlook for $905-915m by a wide margin.

The group is also facing fresh scrutiny over its security and business practices as its popularity grows. New York Attorney General Letitia James has written to the firm raising concerns over its ability to cope with the rise in users.

Zoom has had security flaws in the past, including a vulnerability which allowed an attacker to remove attendees from meetings, spoof messages from users and hijack shared screens. Another saw Mac users forced into calls without their knowledge. In California, the firm is being sued for allegedly giving users’ personal data to outside companies including Facebook without fully informing customers that’s the case.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.