Zoom's Nasdaq Exit: What's Next for the Former Pandemic Darling Stock?

Zoom Video Communications Inc ZM will cease to be a component of the Nasdaq 100 index as its stock performance lags behind significant equity benchmarks in 2023, with only a 5.7% rise.

The company, once a pandemic favorite, saw its shares surge nearly 400% in 2020 as it benefited from lockdowns. 

However, its growth significantly slowed with the return to office work and increased competition from Microsoft Corp's MSFT Teams, resulting in single-digit sales expansion for over a year, a stark contrast to its triple-digit growth during the pandemic, Bloomberg reports.

Other pandemic-era high performers like Peloton Interactive Inc PTON and Teladoc Health Inc TDOC have also failed to keep pace with this year's stock rally, experiencing substantial declines. 

DocuSign Inc DOCU, similarly affected by slowed growth, is reportedly exploring a sale. 

Being part of the Nasdaq 100 typically enhances a company's visibility and trading liquidity, but Zoom and six other companies are exiting the index during its annual update.

Also Read: Zoom Ups Competition With Microsoft, Throws In AI and Google Doc Like Features In Bundled Offering

Wall Street analysts have become more cautious about Zoom, with a majority now holding a "hold" rating on the stock. 

Revenue growth will likely remain modest in the coming years. As the cultural relevance of Zoom diminishes, the company is diversifying its offerings, including contact center software and persistent chat features, alongside its primary video conferencing service. 

Zoom Phone has reached 7 million paid users, but these new services have yet to boost revenue growth significantly.

Zoom is exploring acquisitions for growth, including revisiting a potential acquisition of Five9 Inc FIVN. 

In contrast to Zoom's downturn, other stay-at-home stocks like Roku Inc ROKU and Netflix Inc NFLX have seen substantial gains, with DoorDash Inc DASH making it to the Nasdaq 100 after a 108% climb.

Price Action: ZM shares traded lower by 0.08% at $71.51 on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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