40 Minutes Of Fame


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What's going on?

Zoom Video Communications has certainly made the most of its moment in the spotlight: the teleconferencing provider reported a way better-than-expected quarterly update this week.

What does this mean?

Zoom’s last quarter – which ended in April – saw its revenue grow by 169% versus the same time last year. That was down to all the new users who flocked to the platform under global stay-at-home orders, with everything from homeschooling to house parties suddenly a virtual affair.

Zoom almost doubled its revenue forecast for this year too, which suggests the company’s expecting to both add more paying users and boost the amounts existing subscribers will pay. Fixing users’ many privacy concerns should certainly help with that…

Why should I care?

For markets: Not so fast.

Zoom’s expectation-smashing announcement “only” pushed its stock up 5% on Wednesday – small potatoes after the more-than 200% rise it’s seen this year. The tepid investor response could be because some of them “bought the rumor, sold the news”. In other words, they bought up Zoom’s stock’s in anticipation that it’d benefit from the coronavirus lockdown, and sold after its strong earnings update to secure their profit. On the other hand, it could also be because cautious investors are worried that the company’s temporarily inflated costs – including additional server capacity from Amazon Web Services to cope with all those new users – hints at further pressures ahead.

The bigger picture: Zooming from home.

According to a LinkedIn survey last month, more than 80% of people in desk-based industries – like finance and tech – reckon they can do their jobs just as effectively from their sofas. Nearly a quarter of top executives participating in a separate PwC poll, meanwhile, said they’re looking at trimming office space. So with the potential for a lot more teleconferencing in the future, it’s perhaps no surprise there’s big competition afoot: Facebook recently announced new video-calling features, while telecoms giant Verizon bought Zoom-rival BlueJeans.

Originally posted as part of the Finimize daily email.

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