CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Can the Zoom share price rebound after Cathie Wood buys the dip?

The Zoom share price has fallen 17% this week, as it warned of a growth slowdown. But Cathie Wood’s ARK Invest has bought 600,000 more shares, as a key report highlights that hybrid working may be here to stay.

At the beginning of 2020, Zoom (NASDAQ: ZM) was worth $67 per share. When the pandemic struck, schools, workplaces and extended families immediately went from seeing each other in person to using video conferencing technology to communicate. The Zoom share price rocketed to $559 by 16 October 2020, before losing almost two-thirds of its value to hit today’s price of $206.

The company released Q3 results on 22 November and saw its share price immediately plunge from $248 to below $200 during trading the next day. Cathie Wood spotted an opportunity to buy the dip, and her ARK Innovation ETF (ARKK) fund bought up 538,573 shares, while her ARK Next Generation Internet ETF (ARKW) bought 106,537.

Her confidence in the video conferencing company is a good sign for the stock. Between 20 March 2020 and 12 February 2021, ARK Innovation rose 313% from $38 to $157. This was primarily due to her successful high-stake investment in Tesla, in a move that was deemed risky at the time.

And while Wood’s investment in Zoom is also a risk, the stock was worth three times its current value just over a year ago. And as hybrid working could become an established norm, it might return to those heights again.

Zoom share price: Q3 results

Zoom reported a total revenue rise of 35% year over year to over $1 billion. However, revenue growth in Q2 was 54%, and this growth slowdown was a core reason for the share price fall. Moreover, the company decided not to proceed with a planned $14.7 billion purchase of cloud contact centre platform Five9, instead planning to launch their own solution in 2022.

But the company is in a strong financial position, boasting a cash and marketable securities balance of $5.4 billion. Meanwhile, the number of customers contributing more than $100,000 to TTM revenue rose to 2,507, up 94% year over year.

And after adjusting for one-off expenses, non-GAAP income from operations in Q3 hit $411.3 million, up from $290.8 million in Q3 of the previous financial year. And non-GAAP operating margin was a huge 39.1%.

CEO Eric Yuan commented that ‘we expect to close the year between $4.079 to $4.081 billion in total revenue, representing approximately 54% year-over-year growth, alongside strong profitability and operating cash flow growth.’ While growth may be slowing, the company has the financial firepower to consolidate its huge market gains from the past two years.

Hybrid working

According to the US Bureau of Labor Statistics, a record 4.4 million Americans left their jobs in September, while a similar employment picture is being painted on this side of the Atlantic. A key reason for this ‘great resignation’ is that some employees are refusing to go back to the office full-time and are leaving for companies that offer hybrid working or have gone fully remote.

And Yuan believes that ‘Zoom is placing people at the centre of our communications platform, connecting their disparate work streams into our technology…we are well on our way to becoming an indispensable platform for enterprises, individuals, and developers to connect, collaborate, and build in the flexible hybrid world of work.’

OC Tanner’s 2022 Global Culture Report analysed the perspectives of 38,000 employees and employers from 21 countries, including 2,500 from the UK. Director Robert Ordever said that’ office-based job seekers are now expecting hybrid working to be the norm.’ In what might be a wake-up call for employers, 59% of job seekers cited home working flexibility as a critical factor when applying for a new job, compared to just 42% for childcare.

If the home working revolution continues apace, the Zoom share price could rise again soon. And with Cathie Wood backing the stock, it might be a dip worth buying.

Trade over 16,000 international shares from zero commission with us. Learn more about trading shares with us, or open an account to get started today.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.