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Zoom (ZM) stock is falling continually in the past several days after ‘Zoom Bombing’ hackers attacked its video conferencing service but investors are confident the stock will rise in the long-term.
The current uncertainties in the global markets due to the coronavirus pandemic have affected stocks differently. After many governments issued stay-at-home orders, Zoom Videos experienced a surge in activities as people strived to work from home. In that connection, Zoom Video Communications Inc (NASDAQ: ZM) stock used to enjoy the glow of a rising price.
The share prices surged as a result of enthusiastic research reports coupled with insatiable demand among enterprises and consumers. But, in recent days, the one-time favorite of Main Street and Wall Street has encountered a massive backlash from politicians and regulators.
Zoom’s recent boom has also become its undoing. Hackers have targeted the video-conferencing service due to its recent popularity. The increase in hacking activities has made the FBI warn consumers about the so-called ‘Zoom-Bombing’ incidents.
Additionally, a lawsuit filed on March 30 in California alleges that Zoom (ZM) gave out users’ private data to Facebook Inc (NASDAQ: FB) and other external players without adequately informing customers.
Difference Arises for Zoom
After the hackers seemingly took over, shares of Zoom have lost over 10% since March 27. These losses include a three-session losing streak after surging higher amid coronavirus market uncertainties. On April 1, the shares dropped 6% in the third day of declines registering one of the longest losing streaks for the stock since late January.
Zoom’s current pool of problems is similar to those of Facebook. Most of the high-flying companies that have popular services that access a lot of personal information face these challenges. In most cases, the information that they have has made the companies have high-valued stocks and become targets for scammers and legislators.
Zoom may find itself in the same position as Facebook after the 2016 US presidential elections. A lot of Privacy and data-related hiccups made the company spend billions of dollars enhancing its security and regaining the trust of its users.
Two thoughts on the developments we have seen with #Zoom over the past couple of days
It's clear that changing perception takes much longer & is much harder than making your tools Enteprise class. Just look at Google
Security & Privacy are not the same – Zoom must address both
— Carolina Milanesi (@caro_milanesi) March 31, 2020
Zoom was caught flat-footed in not thinking about some of the exploits people might be using. In the case of ‘Zoom Bombing,’ a hacker hijacks a video conference to post hate images or pornographic videos.
In some incidents, trolls have broken into AA meetings and taunted recovering alcoholics while others have hijacked a virtual meeting of black students at the University of Texas and hurled racist slurs. The FBI’s Boston office on March 30 advised users not to publicize their Zoom meetings or share links to their video conferences on social media.
Sen. Richard Blumenthal, D-Conn., wrote in a letter to Zoom CEO Eric Yuan on March 31:
“The millions of Americans now unexpectedly attending school, celebrating birthdays, seeking medical help, and sharing evening drinks with friends over Zoom during the coronavirus pandemic should not have to add privacy and cybersecurity fears to their ever-growing list of worries. Zoom has a troubling history of software design practices and security lapses that have posed significant risks to the privacy and safety of its users.”
A company spokesperson told reporters in an email on April 1:
“Zoom takes user privacy, security, and trust extremely seriously. As more and new kinds of users start using Zoom during this time, Zoom has been proactively engaging to make sure they understand Zoom’s relevant policies, as well as the best ways to use the platform and protect their meetings.”
A while after details over its data-sharing practices emerged in a Vice Media report, Zoom officials acknowledged the incident of data sharing in its blog posts.
Zoom (ZM) Stock Response
In a separate instance, a Zoom spokesperson said that the company officials would comply with all specifics on how the company will safeguard users’ data. The Attorney General’s inquiry followed a Consumer Reports investigation that discovered that Zoom failed to disclose details on how information is used for marketing, advertising, or other business purposes.
Zoom (ZM) stock has been among the few beneficiaries of the novel coronavirus outbreak that has forced millions of Americans to work remotely. As of March 22, the daily active users increased 378% year-over-year, according to market researcher Apptopia.
Zoom stock has improved 32% since February 19, and the investors are betting the company will become a corporate and consumer staple after COVID-19 dissipates. The stock surged by almost 115% in the first quarter.
But now the ZM price is falling. ZM stock is currently 8.39% down and trading at $125.50.