Zoom stock surges to stunning level

NEW YORK — Zoom surged in early trading Tuesday, making the video conferencing company more valuable than well-established companies in the auto and aviation industries.

The shares rose about 40% to settle above $450, pushing Zoom’s market value to more than $129 billion, after it reported explosive growth during the second quarter as more people paid for subscriptions, giving them more control over virtual meetings. Zoom’s revenue more than quadrupled from the same time last year to $663.5 million and profits blew past Wall Street forecasts.

At the current level, Zoom’s market value exceeds that of two storied automakers, General Motors and Ford, combined, as well the value of aviation giant Boeing and consumer favorite Starbucks.

The company is one of the key beneficiaries of the virus pandemic as more people log on to its videoconferencing service to work from home.

In a show of confidence, Zoom raised its revenue projection for its fiscal year ending in January to nearly $2.4 billion, up from roughly $1.8 billion that the San Jose, California, company predicted in early June.

J.P. Morgan, in a note to investors, said the quarter was both “impressive” and “unprecedented” as it showed strong customer retention and solid growth from customers with more than $100,000 in revenue.

But, the company also reported a rise in customers with less than 10 employees. Those customers now account for 36% of revenue, according to J.P. Morgan. That is the riskiest customer segment and could mean a pull back in revenue once COVID-19 becomes less of a threat and more people return to offices.