Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
Shares of Zoom fell 8 percent Monday, adding to their sharp declines in the past few days, as the video conferencing app battles privacy concerns and increased competition from deep-pocketed rivals.
ZOOM CEO: CORONAVIRUS SECURITY CONCERNS SHOWED 'I REALLY MESSED UP'
|ZM||ZOOM VIDEO COMMUNICATIONS, INC.||263.71||+8.74||+3.43%|
The stock had surged to a record high in March as demand for the app skyrocketed with millions of people around the world using it for everything from school lessons to business meetings amid lockdowns imposed to slow the spread of the coronavirus.
But multiple reports last week that questioned the company’s data privacy practices have spooked investors, which led to the loss of a third of the company’s market value from its record high.
The stock was last down 7.9 percent at $118.05 on Monday morning and it was among the worst-performing stocks on the Nasdaq.
ZOOM'S PRIVACY CONCERNS AMID CORONAVIRUS BOOM PROMPTS US AGS TO ASK QUESTIONS
Brokerage Credit Suisse downgraded Zoom Video Communications’s stock to “underperform” from “neutral." Analysts on average rate the stock “hold," according to Refinitiv data.
“While implied new customer growth may seem undemanding compared to recently disclosed 20x participant growth, we expect much of the recent surge will prove ephemeral, and/or comes from free users or education, which are very difficult to monetize,” Credit Suisse analysts wrote in a note.
Last week, at least two U.S. state attorneys general sought information from Zoom after reports that questioned its privacy and security.
HOW TO HOST SECURE ZOOM MEETINGS WHILE WORKING FROM HOME
Some school districts in the United States have started to ban the app for online lessons because of growing security concerns, and the New York City Department of Education said teachers should work through Microsoft Teams, Washington Post reported on Saturday.
Eric Yuan, CEO of Zoom Video Communications poses for a photo after he took part in a bell-ringing ceremony at the NASDAQ MarketSite in New York, New York, U.S., April 18, 2019. (REUTERS/Carlo Allegri)
Reuters also reported last week that Elon Musk’s rocket company, SpaceX, banned its employees from using Zoom because of significant privacy and security concerns.
While analysts believe that many issues, especially those originating from user error, are likely to get solved in the short term, others could remain for some time.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“Encryption concerns have already caused some high profile customers to curtail Zoom usage, and we expect others could follow though the majority of organizations likely have no issue,” Credit Suisse analysts said.
The company’s daily users ballooned to more than 200 million in March from a previous maximum total of 10 million, Chief Executive Officer Eric Yuan said last week.
Microsoft’s Teams, which competes with Zoom, had 44 million users globally as of March 18, Microsoft said last month, more than double the 20 million daily active users it reported in November.