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According to a study conducted by Refinitiv, at least six analysts cut their price target on Zoom stock.
Despite reporting a record-breaking quarter at the beginning of the week, Zoom Video Communications Inc (NASDAQ: ZM) stock dipped nearly 17% on Tuesday to close the day trading at $289.50. Meanwhile, some of the losses amounting to 1.21% had been regained during the pre-market trading session.
The dip has directly been attributed to the slower growth rate expected in the coming quarter. According to the company, as more people report back to office work setup, the less the demand for its product will be in the coming quarters. Consequently, Wall Street analysts were somewhat distressed with the call, thereby recalling their price target to lower prices.
“Significant questions are outstanding regarding how new customer demand and customer churn rates will stabilize in the core business following the loosening of COVID-19 restrictions,” analysts at Daiwa Capital wrote in a note.
According to a study conducted by Refinitiv, at least six analysts cut their price target on Zoom stock. Notably, the video conference sharing platform noted that it expects to report revenue between $1.015 billion and $1.020 billion. Should the figures materialize, the company will have recorded a rise of approximately 31% during the current quarter. However, it will have seen a major decline from the multiple-fold growth rate recorded last year.
Analysts polled by Refinitiv had expected the company to report adjusted earnings per share of $1.09 and revenue of $1.01 billion in the upcoming quarter.
Zoom (ZM) Stock and the Market Outlook
Zoom stock has been on a decline in the foreseeable past despite reporting notable growth during the Covid pandemic. According to market analytics provided by MarketWatch, ZM shares are down approximately 31.65%, 14.18%, 11.50%, and 27% in the past year, year to date, three months, and one month respectively through Tuesday.
The company has seen its market capitalization slashed by half from over $170 billion during the past few months. Meanwhile, the company has a reported market of approximately $103.77 billion and 240.7 million outstanding shares.
Zoom enjoyed the global economic shutdown as it saw its customers rise exponentially. Currently, the company has around half a million customers with over 10 employees who account for around 64% of its revenue.
In a bid to keep an eye on its future growth prospects, the company announced its intent to acquire cloud contact center software provider Five9 for $14.7 billion in stock. With such a high valuation, the company has the time and potential to overrun the previous stock dip and record a new ATH.