Zooming up and down

Perhaps no company’s stock has boomeranged during the pandemic as extremely as Zoom’s. The health crisis transformed the company’s once-obscure online video meeting service into an indispensable tool that has boosted Zoom Video Communications, Inc.’s annual revenue above $4 billion — six times more than the $623 million recorded just three years ago. Profits have followed a similar trajectory.

Yet Zoom’s stock price has recently been hovering in the $70-$75 range, a drop of more than 80% from its peak of nearly $600 in October 2020. The plunge has pushed the shares back to their prices in January 2020 before pandemic-driven lockdowns changed everything.

That means investors looking for undervalued stocks may want to consider whether the selloff driven by Zoom’s recent slowdown in growth has been as overdone as the exuberant run-up in the company’s stock.

On the other hand, Zoom recently predicted its revenue during its current fiscal quarter spanning the November-January period could come in slightly below its revenue of $1.1 billion in the previous quarter covering July through October. It would be the first time in the past three years that Zoom’s revenue dropped from one quarter to the next.