Zoom jumps 9% after the video platform beat earnings estimates and forecast strong growth

Zoom meeting
Zoom stock jumped after it beat fourth-quarter earnings expectations.

  • Zoom stock jumped in premarket trading Tuesday after the firm posted better-than-expected fourth-quarter earnings.
  • Total quarterly revenue came in at $882.5 million, beating analysts’ expectations of $811.8 million.
  • Yet the stock price remained below its October high, as investors look toward economies reopening.
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Zoom shares jumped 9% in premarket trading on Tuesday after the videoconferencing platform posted better-than-expected fiscal fourth-quarter earnings on Monday and said it expected strong growth to continue this year.

Zoom was up 8.6% as of 5:45 a.m. ET, taking shares to $444.88 in the premarket. The stock had jumped 9.65% on Monday before closing at $409.66 a share ahead of the earnings announcement.

Total revenue for the quarter to the end of January came in at $882.5 million, above analysts’ expectation for $811.8 million.

Revenue was up 369% year-on-year, the company said, reflecting the rapid rise of Zoom to prominence during the coronavirus pandemic, when people and businesses around the world turned to the service to keep in touch.

The big question for investors, however, is whether Zoom can keep up its rapid growth. The company’s founder and CEO, Eric Yuan, pleased the markets Monday by saying it could.

“As we enter FY2022, we believe we are well positioned for strong growth with our innovative video communications platform,” he said in a statement to accompany the earnings.

Zoom said it expected total revenue for the financial year ending in early 2022 to be $3.76 billion to $3.78 billion, above Wall Street estimates.

Despite the bullish forecasts and rising stock price, Zoom’s shares remain well below their October high of more than $560. That reflects investors’ expectations that the reopening of economies will pull people away from the technologies that have become central to their lives.

The company’s shares are up more than 20% in 2021, however, outperforming the Nasdaq’s 5% rise.

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Zoom could soar another 57% as work-from-home will continue long after the pandemic era, says a senior stock analyst

FILE PHOTO: Small toy figures are seen in front of diplayed Zoom logo in this illustration taken March 19, 2020. REUTERS/Dado Ruvic/Illustration
Small toy figures are seen in front of diplayed Zoom logo

  • D.A. Davidson’s Rishi Jaluria believes Zoom will be an essential product long after the coronavirus vaccine is deployed and workers return to offices. 
  • The managing director and senior research analyst told CNBC on Wednesday Zoom could surge another 57% to $600 following its incredible rally this year. 
  • No one is going to be a hundred percent remote or 100% in the office, and I think zoom for example, is a critical part of making that happen,” the analyst said.
  • Shares of Zoom slipped as low as 6.9% shortly after the Wednesday opening bell. 
  • Watch Zoom trade live here.

D.A. Davidson’s Rishi Jaluria believes Zoom will be an essential service long after the coronavirus vaccine is deployed and workers return to offices. The managing director and senior research analyst told CNBC on Wednesday Zoom could surge another $600, a 57% upside from current levels, following a massive rally this year.

Jaluria explained that the nature of work has been “irreversibly changed” by the coronavirus pandemic, and he anticipates that the future of work will be a hybrid of remote and in-person activity.

“No one is going to be a hundred percent remote or 100% of the office, and I think zoom for example, is a critical part of making that happen,” the analyst said.

If investors had to name one stock of the year for 2020, it’d likely be Zoom. The virtual conferencing software company skyrocketed roughly 500% this year as video calls went from a less-adequate substitute for a “real” meeting to the only way to conduct business. 

After such an massive rally, some investors may be doubtful that the stock could go any higher. But Jaluria said the benefits of Zoom will be long-lasting. 

Read more:We spoke to short-seller Rob Majteles, who says he was ‘wrong early’ on Tesla, but he still believes the market is due an ‘extraordinary reassessment’

Zoom has pared back some gains from its highs in October, and Jaluria said now is a great buying opportunity for the company. Shares dropped 6.9% shortly after the open on Wednesday to as low as $380.

The analyst added that he sees opportunities in other work-from-home stocks including Fastly, Twilio, Docusign, and RingCentral, which are all providing necessary services for enabling the hybrid work future, he said.

“I do think a lot of these names have a good amount of upside, especially because I feel like the market is starting to actually trade down a lot of these work from home names because they think post pandemic, that benefit fades away,” said Jaluria. “And as we think about this future of work, I think it’s fair to say that these benefits aren’t short-term, they are very long lasting [and] irreversible.” 

Read more:UBS says buy these 20 discounted small-cap and mid-cap stocks expected to take off in 2021 – including one that could rally 60%

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