Zoom Shares Drop 11% as Employees Return to Office

Zoom shares fell more than 11% on Tuesday trading after the video conferencing company predicted a sharp drop in demand and analysts questioned its future plans as employees return to the office.

Most Video conferencing services like Zoom, Cisco, Microsoft Teams and Salesforce Slack have joined millions of new users as the pandemic forced people out of work, schools and banned traveling.

With the pandemic under control, Zoom will have to find new ways to grow. The company had already raised $14.7 billion on Five9 in July to grow the call center business. Meantime, analysts said it will just take a few quarters for Zoom to return to its real growth rate.

“Questions remain outstanding about how new customer demand and customer volatility will stabilize after the easing of COVID-19 restrictions in core businesses,” Daiwa Capital analysts wrote.

Zoom on Monday forecast expected revenue for the current quarter between $1.015-$1.020 billion, indicating growth of about 31% compared to the persified growth rate in 2020.

According to Refinitiv, four brokerages have downgraded their price targets on Zoom, with Piper Sandler being the most bearish, cutting their price target from $100 to $369. The company's shares are set for their 9-month low as they tumbled to $307.5 in trading.

Last year, the company's shares hit their highest levels since February, reaching $175 billion in October, since then, stocks have fallen. Analysts expect that zoom's capitalization will be approximately half of the October peak, if the current pre-market losses occur.