Zoom shares tank 16% as company warns growth slowing

0
56

You’re not the only one who’s getting sick of Zoom.

Investors soured on the video conferencing giant Tuesday and sent its shares plummeting after the company warned investors that its growth is slowing down.

Zoom shares were down 15.8 percent at $272.80 around noon on Tuesday, according to MarketWatch data.

The decline came after the company posted $1.02 billion in revenue during the second quarter — marking its first billion-dollar quarter and beating analysts’ expectations.

But investors seemed more focused on the company’s bleaker third quarter forecast than its second quarter results.

Zoom said that it expected to take in $1.015 billion and $1.02 billion during the quarter ending Sept. 30. That means revenue growth would either stay unchanged or fall during the second and third quarters, spooking investors who have become accustomed to quarter after quarter of blockbuster growth during the pandemic.

“We had expected [a slowdown] towards the end of the year, but it’s just happened a little bit more quickly than we expected,” Chief Financial Officer Kelly Steckelberg told investors in an earnings call.

Zoom headquartersThe decline came after the company posted $1.02 billion in revenue during the second quarter — marking its first billion-dollar quarter and beating analysts’ expectations. Gado via Getty Images

San Jose, California-based Zoom has experienced blistering growth during the pandemic, rocketing from an obscure firm at the beginning of 2020 to a household name just months later.

The company’s stock surged from just $67.28 at the beginning of 2020 to $559 last October. It has since declined by nearly half amid vaccinations and reopenings.

Competition from legacy platforms such as Cisco’s Webex and Microsoft Teams has also dented Zoom’s efforts to grow by winning bigger contracts from businesses.

A Zoom callInvestors have become accustomed to quarter after quarter of blockbuster growth from Zoom during the pandemic.Corbis via Getty Images

Analysts said the company would try to jumpstart growth by aggressively spending on expansion and ramping up its platform and Zoom Phone — its cloud-calling product for businesses.

Zoom recently announced the buyout of call-center software maker Five9 for $14.7 billion in its largest deal, as well as Kites GmbH, a firm that helps in real-time language translation.

“We had expected [a slowdown] towards the end of the year, but it’s just happened a little bit more quickly than we expected,” Zoom’s Chief Financial Officer Kelly Steckelberg told investors in an earnings call. Boston Globe via Getty Images

With Post wires

Source link