The poster child of pandemic-based winners is coming back down from that temporary high. That might actually be good news for some investors.
What happened
Shares of Zoom Video Communications ( ZM -1.60% ) fell 23% in November, according to data from S&P Global Market Intelligence. The online meetings specialist’s red-hot trajectory in 2020 turned sour this year. Zoom’s stock has now lost more than half of its value over the last 52 weeks, missing out on a 27% gain in the S&P 500 market index:
So what
Zoom’s November pain started in the first week of the month. Pharmaceuticals giant Pfizer presented strong results from trials of an anti-coronavirus pill, driving many stocks sharply higher as investors saw a quicker end to the global health crisis. The same idea undermined Zoom’s business prospects as the need for remote video meetings should fade out as workers go back to their office desks. Zoom shares closed 6% lower that day.
The stock took another big hit two weeks later, making a 14.7% retreat on Nov. 23. This time, the culprit was a solid earnings report with hints of worse news to come.
Third-quarter sales rose 35% year over year to $1.05 billion. Adjusted earnings increased by 12% to $1.11 per diluted share. Your average analyst would have settled for earnings near $1.09 per share on revenue in the neighborhood of $1.02 billion. That type of modest surprise would normally be enough to support even a surging stock price.
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