Covid restriction fatigue may wipe $100bn off Zoom value

By Thyagaraju Adinarayan for Irish Examiner 

Zoom Video Communications, the poster child of the so-called “pandemic winners” basket, is losing more of its lustre.

The video conferencing company’s shares slumped 18% to the lowest since June 2020. Its latest quarter showed slowing growth as people started socialising in-person – also a trend that roiled the shares of other lockdown winners Peloton and Teladoc Health.

Including the latest losses, Zoom may see $100bn (€89bn) wiped out from its market value since its October 2020 peak, which is a decline of about 62% for the stock. Despite the pullback, the stock is still up a whopping 500% since its 2019 debut.

Both Zoom and Peloton have given back the bulk of their gains since the pandemic’s onset, suffering lockdown withdrawal symptoms.

What’s more, these high-growth companies could be hurt by rising bond yields, which tend to discount the present value of future profits.

Still, some analysts are backing Zoom to bounce back citing opportunity to grow in enterprise communications and falling valuations. Once expensive, Zoom’s recent sell-off has brought their valuation down to 14 times estimated annual sales – cheaper than many of its fast-growing tech peers.

 

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