Zoom Video Communications Inc (NASDAQ:ZM) stock slumped as Wall Street panicked over slowing sales growth despite expectation beating earnings numbers for the third quarter.
The video conferencing firm, which burst into the world’s consciousness amidst the pandemic, reported earnings per share of US$1.11 which beat consensus analyst forecasts for US$1.09 as revenue was marked at US$1.05bn against expectations of US$1.02bn.
Despite the apparent ‘beat’, the US$1.05bn revenue figure marked a growth rate of 35%, representing a sharp slowdown from 54% in the prior quarter and the 300% jump seen in the three months before that.
Naturally, some amount of deceleration was to be expected as office working phased back in though market watchers note that the revenue growth rate is now at its lowest since before Zoom’s 2019 IPO.
“Zoom was the stock market’s poster child during the pandemic as the ultimate beneficiary of the stay-at-home trend,” Victoria Scholar, head of investment at Interactive Investor, said in a note.
“The video tech company’s share price performance has become closely correlated with COVID-19 cases, lockdowns, and travel restrictions, which is why the stock gained more than 400% last year, peaking around the time that the first positive vaccine trials were announced.
Scholar added: “Clearly the return to the office is weighing on demand for its technology.
“The flipside is that a persistent fall in executive travel and a permanent acceptance of home working should translate into longer-term demand for Zoom’s offering, with earnings growth expected to continue, albeit at a slower pace than last year as it starts to decorrelate from Covid.”
Zoom stock fell a further 6.8% in ‘after hours’ trade, down to US$225.80, after losing 3.59% prior to Monday’s closing bell in New York.