The company’s stock is still up considerably from its April IPO.
Shares of Zoom Video Communications fell 6% this week, in spite of a favorable rating from analysts at William Blair. Analyst Bhavan Suri initiated Zoom as outperform, due to the company’s “compelling growth drivers.”
And the company’s stock is still up 135% from its April IPO. Investors are awaiting Zoom’s first quarterly earnings report, which is due on June 6.
Things to like about Zoom
Zoom has experienced impressive customer growth and has doubled its revenue every year for the past two years. The company does a good job of bringing in new customers while strengthening the relationships with its existing customer base.
Zoom’s growth is especially impressive given that the company has a lot of competition from companies like Microsoft and Cisco Systems. According to Suri, Zoom’s superior user experience is what sets it apart from its competitors.
The company’s core product is its video conferencing software, which is free to use up to a point. From there, Zoom can upsell its customers a variety of related products and services that compliment the software. The “freemium” model is popular for tech companies because it gives customers the opportunity to try the product and then upgrade later.
In the past, video conferencing was a notoriously tedious and difficult process. But Zoom’s software is intuitive and incredibly easy to use.
If you want to video chat with someone, you simply send that person a link and there’s no need to install anything. And it integrates seamlessly with software companies normally use at work like Google, Slack, and more.
The market for video software will only continue to grow as the remote workforce expands and companies look for new ways to collaborate. Zoom offers a good solution with a pricing structure that is flexible and relatively inexpensive.
However, there’s been a lot of debate over whether Zoom’s stock is worth its high valuation. The company’s future growth looks promising but it may not be a good stock to buy until the price drops a bit lower.