Another day, another breakout in tech stocks. Zoom Video Communications (ZM Stock Report) posted extraordinary results on Monday for the quarter ended July. As a result, ZM stocks soared 41% on Tuesday. That lifted the company’s valuation to $129 billion, overtaking IBM (IBM Stock Report) in terms of market capitalization. Among the rules for S&P 500 inclusion are a market capitalization of $8.2 billion, highly liquid stocks, and a public float of 50% of stocks. The video conferencing tech stock has met all the requirements.
The video conferencing company is perhaps the biggest beneficiary from the coronavirus pandemic. This makes it one of the best tech stocks to buy this year. After all, employers across the globe have turned to video conferencing to stay connected to keep disruptions to productivity at a minimal level.Zoom’s Growth Is Here To Stay As More People Sign Up For Its Services
Zoom has risen to stardom this year as millions of people use Zoom’s video conferencing for work or even for school. But many also use it to carry out video communication to connect with friends and family during the pandemic.
While the service is free for most users, hundreds of thousands of organizations are willing to pay to have access to enhanced features. Zoom now has more than 370,000 business customers with more than 10 employees. And that is a stunning growth of 458% from the year before.
Although the global economy begins to gradually reopen, many people still continue to work and learn from home. And Zoom is helping to make this possible. “Organizations are shifting from addressing their immediate business continuity needs to supporting a future of working anywhere, learning anywhere, and connecting anywhere on Zoom’s video-first platform,” CEO Eric Yuan said in a press release.
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After Zoom’s spike in stock price, investors are on the lookout for other companies that might benefit from the pandemic in the same way as Zoom. The focus is on those that have yet to report quarterly financial results.
Amongst them are DocuSign (DOCU Stock Report), PagerDuty (PD Stock Report), and Slack (WORK Stock Report), just to name a few. The stay-at-home trend is likely to continue despite the restrictions being eased, Zoom isn’t the only video conferencing stock that is poised to benefit. Many companies have gotten accustomed to the new paradigm shift. Therefore, these complements to Zoom could be worth the risks.
Despite intensifying competition from the likes of Microsoft (MSFT Stock Report), Alphabet (GOOGL Stock Report), and other communication software providers, Zoom is signing uploads of new customers. The company is expecting full-year revenue of $2.39 billion, an increase of 284%. Most businesses aren’t growing that quickly. And investors clearly agree, judging by how much they are scrambling to buy a stake in Zoom.
Now we all know what Zoom is capable of achieving. The strong growth of paying subscribers this quarter has clearly been beyond the imagination of the market. Will using Zoom be a habit that sticks around even after the pandemic? Your guess is as good as mine. Many organizations continue to utilize the services from Zoom even after reopening. And some are even open to having a long term remote workforce. It seems the usage of video conferencing will likely rise. And ZM stock appears to be the best for a pure-play exposure.