Zoom shares zapped amid privacy concerns and analyst doubts
Shares of Zoom fell more than 7 percent on Monday afternoon trading, adding to their sharp declines in the past few days, as the video conferencing app battles privacy concerns and increased competition from deep-pocketed rivals.
The stock had surged to a record high in March as demand for the app skyrocketed with millions of people around the world using it for everything from school lessons to business meetings amid lockdowns imposed to slow the spread of the coronavirus.
But multiple reports last week that questioned the company’s data privacy practices have spooked investors, erasing over a third of the company’s market value from its record high.
The stock was last down 7.7 percent at $118.30 at 1:30 p.m. Monday, among the worst performing stocks in the Nasdaq.
Brokerage Credit Suisse downgraded Zoom’s stock to “underperform” from “neutral.” Analysts on average rate the stock “hold,” according to Refinitiv data.
“While implied new customer growth may seem undemanding compared to recently disclosed 20x participant growth, we expect much of the recent surge will prove ephemeral, and/or comes from free users or education, which are very difficult to monetize,” Credit Suisse analysts wrote in a note.
Last week, at least two US state attorneys had sought information from Zoom following multiple reports that questioned its privacy and security.
Some school districts in the US have started to ban the app for online learning from home because of growing security concerns, while the New York City Department of Education said teachers should instead work through Microsoft Teams, the Washington Post reported on Saturday.
Source : Reuters Link