Tuesday's Market Minute: The Growth Stock Of 2020

Zoom Video Communications Inc ZM was far from a household name when it filed to go public on Mar. 22, 2019. When the stock began trading in mid-April last year, it was best known among corporations. The stock had laid a solid foundation prior to its 2020 breakout, with its IPO share price spiking 72% in the first day of trading. The company’s equity had already risen more than 100% since its first close, marking that shares had more than doubled in a year.

But this Software as a Service business could’ve hardly anticipated the momentum it would see in the first half of 2020. The company rapidly gained popularity as being one of the most user-friendly video meeting apps. In addition to corporate America’s quick adaption of Zoom due to the work-from-home push, Zoom Video became the preferred method for virtual learning among teachers, a fix for socially-distant video hangs with friends and family, and even a venue for makeshift graduation ceremonies and other various celebrations. Consequentially, Zoom’s price activity reflects this heightened demand. ZM shares are up over 370% so far this year and jumped more than 9% following their fiscal 2Q earnings release.

The video conferencing company reported it made as much money in one quarter as it did in all of 2019, with revenue more than quadrupling from a year ago. The San Jose-based company lifted its full-year sales outlook to a range of $2.37 billion to $2.39 billion, with an adjusted operating profit of between $730 million and $750 million. This strong earnings report comes after Zoom’s profits expanded by more than 10 times with 169% growth in its fiscal first quarter.

Zoom founder and chief executive Eric Yuan said in Monday’s news released, “Our ability to keep people around the world connected, coupled with our strong execution, led to revenue growth of 355% year-over-year in 2Q.” Shares touched new all-time highs following the blowout quarter.

Image by antonbe from Pixabay