Why Zoom Stock has jumped today

What happened

Actions of Focus on video communications (NASDAQ: ZM) climbed 5.7% on Friday, as investors turned to stocks positioned to perform relatively well during a COVID-19 resurgence.

So what

The discovery of a new strain of coronavirus has triggered a violent liquidation in the financial markets. Health officials fear the heavily mutated variant, called B.1.1.529, could be highly contagious. They are also unsure whether the vaccines currently available will be able to provide adequate protection against it.

Government leaders in the United States, Europe and Asia have acted quickly to restrict travel to and from South Africa and other African countries. The actions are designed to slow the spread of the new variant of the coronavirus. However, due to the global nature of international trade, it may only take some time for the tension to spread across the globe.

Image source: Getty Images.

Now what

The news has prompted investors to sell shares of companies seen as economic reopening games – and back into companies that could see demand for their products and services increase if COVID-19 cases escalate. Zoom, as a leading provider of video conferencing and other communication software, is expected to profit from this unfortunate scenario.

After skyrocketing during the early stages of the pandemic, Zoom’s growth has slowed in recent quarters as more people have returned to their traditional workplaces. The company’s revenue growth decelerated to a still quite impressive level of 35% in the third quarter of fiscal 2022, down from the astonishing 367% growth it had enjoyed during the period. ‘last year.

While Zoom’s pace of expansion is unlikely to return to these exhilarating levels, an increase in the number of COVID-19 cases could help its revenue and profits grow at a higher rate than expected in the coming quarters.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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