Mar 31, 2020 - Economy & Business

Zoom's coronavirus-fueled stock boom may be doomed

Dion Rabouin, author of Markets
Data: FactSet; Chart: Axios Visuals

Video conferencing giant Zoom's stock has taken flight in recent weeks, up 121% this year while the S&P 500 has fallen 19% — but the good times may be coming to an end.

Driving the news: The New York attorney general's office sent a letter to the company Monday outlining a number of concerns about security flaws and vulnerabilities "that could enable malicious third parties to, among other things, gain surreptitious access to consumer webcams," the New York Times reported.

The big picture: Zoom has taken off as more small- and medium-sized businesses have begun using the service as they have been forced to go remote because of the coronavirus outbreak.

  • However, Goldman Sachs equity research analyst Heather Bellini issued a "sell" rating on the stock, arguing that its current price outpaces reasonable expectations of growth.

Between the lines: Bellini expects around three quarters of the companies currently using Zoom's free trial option will become users, but as the economy worsens she expects many will have to cut their subscriptions to reduce costs and others will simply go out of business.

  • Further, Zoom's stock currently sells for more than 1,600 times trailing earnings and she expects the company's profits growth rate will subside as it ramps up expansion.

Go deeper: Work goes remote in the face of the coronavirus

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Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

The Department of Health and Human Services moved on Thursday to require that an individual's race, ethnicity, age and sex be submitted to the agency with novel coronavirus test results.

Why it matters: Some cities and states have reported the virus is killing black people at disproportionately high rates. There are gaps in the national picture of how many people of color are affected, since the data has not been a requirement for states to collect or disclose.

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Photo: George Frey/AFP via Getty Images

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Why it matters: The results of the study, which claimed to have analyzed data from nearly 96,000 patients on six continents, led several governments to ban the use of the anti-malarial drug for coronavirus patients due to safety concerns.

As techlash heats up again, here's who's stoking the fire

Illustration: Aïda Amer/Axios

As controversies around online speech rage against a backdrop of racial tension, presidential provocation and a pandemic, a handful of companies, lawmakers and advocacy groups have continued to promote a backlash against Big Tech.

The big picture: Companies like Facebook and Google got a reputational boost at the start of the coronavirus lockdown, but that respite from criticism proved brief. They're now once again walking a minefield of regulatory investigations, public criticism and legislative threats over antitrust concerns, content moderation and privacy concerns.