New York (CNN Business)The pandemic lift for Zoom has gone poof.
Shares of the video conferencing company plunged more than 10% Tuesday morning after Zoom reported revenue for the second quarter that missed analysts’ forecasts and issued a weak outlook for sales and profit in the third quarter.
Zoom’s (ZM) stock was a Wall Street darling in 2020, as many companies relied on video chats to conduct meetings as workers remained stuck at home due to worries about Covid-19. But now that many white collar employees are starting to commute back to their offices, demand for Zoom’s software has begun to wane. There are also concerns that the company may have reached a saturation point with regards to customers.
“We have moved beyond the pandemic buying patterns,” said Zoom chief financial officer Kelly Steckelberg during a conference call with analysts Monday afternoon following the earnings release. “And as we believe this customer behavior will persist, we have factored it into our outlook.”
It was already a tough year for Zoom even before the company reported its latest results. The stock was down nearly 50% year-to-date heading into Monday. And just last week, Citi analyst Tyler Radke slashed his rating on Zoom to a rare “sell,” citing concerns about slowing growth.
At least a dozen more analysts cut their price targets on Zoom late Monday and early Tuesday following the earnings, according to Refinitiv.
One of those analysts, Siti Panigrahi of Mizuho Securities USA, said in a report Tuesday that the rest of this fiscal year will be “a transition year as Zoom invests to build a durable, post-pandemic growth profile.”
The company is trying to get user and sales growth back on track with newer products such as the Zoom Phone voice service, which lets customers make phone calls over the internet, and a lower-priced Zoom Rooms conferencing platform.
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