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Return to office work could hit Zoom hard: Wall Street analysts warn

Wall Street analysts warned that a return to office work could hamper the success of Zoom in luring small corporate customers.

Return to office work could hit Zoom hard: Wall Street analysts warn-snj
Bengaluru, First Published Sep 1, 2020, 8:48 PM IST
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New Delhi: On September 1, the Wall Street analysts raised price targets for Zoom Video Communications as its shares were all set to hit record highs. Meanwhile, if the coronavirus pandemic eases and a return to office work occurs then it would destroy the success in luring small corporate customers, according to a Reuters report.

The report added that the Zoom shares soared 39% to $452 in trading. It also said that brokerages raised price guidance by an average of $161 after the company beat estimates for second-quarter results and lifted its annual revenue forecast.

It then said that the success stories during the health crisis is turning its huge free-user base into hard cash.

JP Morgan analyst Sterling Auty, however, warned that the churn rate for Zoom’s high-risk small customers pointed to the risk of a pullback in revenue as the pandemic eases.

“The surge in growth has come increasingly from the riskiest customer segment,” he said. “Customers with less than 10 employees reached 36% of total revenue in the quarter.” 

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