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Zoom Video Communications (ZM) stock jumped over 11% today. This comes as the company recorded 300 million daily users, up 50% from the beginning of April even as the company battles a privacy backlash and faces competition from Google Meet.
Zoom Video Communications (NASDAQ: ZM) stock recorded a sharp breakout of over 11% to trade above $167 during the trading session on April 23. It was a surprise breakout as most expected the company to drop both in valuation and users due to the security and privacy backlash with most institutional and government users.
Zoom conferencing app saw its users grow by another 50% to reach 300 million in the past three weeks, according to Chief Executive Eric Yuan. This is being given as the main factor that saw the shares surge after the market opened on Thursday.
The odds have not been on their side previously since it has been battling with a privacy backlash, that has resulted in key institutions and governments to ban its use. Most of the lost customers are ending up using Google Meet which has launched Zoom-like features.
Auto-car maker Daimler recently decamped from Zoom services due to security and privacy issues. “This does not comply with the security requirements of our company. Therefore, we can confirm that Daimler prohibits the use of Zoom for corporate content until further notice,” the company noted.
Other notable institutions and companies that have decamped include SpaceX, Standard Chartered, Germany governments, Taiwan’s and also Singapore government. Most are moving to use Skype or Google Meet.
Counter Measure that Might Have Fueled Zoom (ZM) Stock Surge
In order to counter the accusation and privacy issues, Zoom has put in place measures to reassure its users of safety. This has helped increase the ratings as more investors gain confidence in the management to deliver amid the ongoing coronavirus.
Researchers noted that the “Zoom Bombing” incidents, which were reported by several users were a result of simple choices that were made by some of the users. As a result, the company has included giving the hosts the ability to lock meetings and also be able to restrict what attendees can do.
According to Lea Kissner, a security consultant at Zoom, the 256-bit GCM encryption being introduced with Zoom 5.0 next week is in line with what other similar companies are offering. She added that all Zoom customers will have to switch to the new cryptographic mode from May 30.
Zoom has also added a feature that will allow account admin to choose datacenter regions for their meetings. This might be a good place to start gaining back the lost trust and continue winning amid the coronavirus outbreak.