There’s a Big Problem With Zoom Stock

While the stock market has tumbled over the past month as the novel coronavirus outbreak shifted from something happening in China to a global pandemic, certain stocks have bucked the trend. Zoom Video Communications (NASDAQ: ZM), a provider of subscription-based video conference software, is one of them. Since the start of 2020, Zoom stock has more than doubled, while the S&P 500 is down nearly 25%.

The story behind Zoom's outperformance makes a lot of sense. As businesses, schools, and other organizations require employees to work remotely amid the pandemic, demand for video-conferencing capabilities is surging. Zoom was already growing quickly before the pandemic, with revenue up 88% in fiscal 2020. That growth rate will now almost certainly accelerate, at least for a while.

Zoom was also profitable on a GAAP basis last year, a rarity among fast-growing software-as-a-service companies. It's hard to claim that Zoom isn't a great company, given its results.

Source Fool.com