The pandemic darling Zoom Video Communications, Inc. (NASDAQ: ZM) stock price rebounded more than 6% after the internet communication giant announced that it has sold one million Zoom Phones since it launched the product two years ago.
“Zoom Phone has been an astounding success,” said Elka Popova, VP of Connected Work Research at Frost & Sullivan. “Thanks to its innovative pricing model and widespread availability in 44 countries and territories, it has quickly become an attractive option for many SMB and enterprise customers around the world.”
Despite the latest gains, Zoom Video Communications’ shares plunged more than 35% from an all-time high of $570 that it had hit in October. The selloff is mostly blamed on easing social distancing policies and coronavirus vaccine discovery. Premium valuations are among the factors behind the downtrend in the past few months.
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Zoom seeks to expand the revenue base
The market analysts believe that the massive share price selloff is presenting a buying opportunity for long-term investors. D.A. Davidson names Zoom the best stock pick for 2021, with a price target of $600. The analyst Rishi Jaluri says the company is investing in the right places to enhance its product line.
The Information recently reported that Zoom plans to introduce a corporate web email service and calendar app. The reports also show that Zoom is also seeking to expand its business through a series of acquisitions. The company has also raised $1.75 billion through a public offering of 5.1 million shares, marking its first public offering since going public in April 2019.
Zoom expects to generate fourth-quarter revenue in the range of $806 – $811 million compared to the consensus estimate of $719 million. For the full year, the revenue is likely to reach $2.580 billion, representing a growth of 314% from the past year.
Although it will be hard for Zoom to sustain similar growth trends in post-pandemic life, its strategy of enhancing the revenue base by introducing new products would play a key role this year.
