Stock Market: You wish you would have invested in Zoom stock…
Written by: Maria Opie
Before the covid 19 pandemic, the world was already on a constant search for more ways to become connected. Whether it was through Instagram lives, Snapchat stories, or Facetime, we were constantly video chatting. However, when the pandemic forced everyone to quarantine into their homes, we were forced to only connect virtually. Thus, the rarely used Zoom suddenly became in the spotlight. It seemed overnight Zoom emerged from the background and became at the forefront of every business, school, and organization as people needed ways to connect with one another face to face - but through a screen. Many were, and still are today, very thankful for the resource that allowed us to connect, and continues to allow us to connect face to face through a screen. However, those that are most thankful for Zoom are definitely those that invested in Zoom stock before or at the beginning of the covid-19 pandemic.
To begin to understand why those that invested in Zoom stock prior to our current pandemic are extremely thankful for Zoom, we must first have a basic understanding on how the stock market works. When someone owns “stock” in a company, it means that they have partial ownership, which represents a proportionate claim on the companies net profit and its assets. Many small companies need to sell shares in order to raise enough capitol in order to lease an office, hire employees, create a distribution network, etc. However, people often buy shares of companies when they feel that company will soon start creating a larger profit. This is because as the company expands and starts to prosper, the price of the stock that they bought will increase because the company's net worth increases. Then, buyers can make a profit if the price of their shares increases by selling their shares to other buyers.
According to CNBC, when looking at the stock prices of Zoom, Zoom’s stock price increased 569% this year. Which increased its market cap to $129 billion. This market cap puts Zoom larger than the International Business Machines Corp (IMB) and Advanced Micro Devices Inc. (AMD). On August 31st 2020, Zoom reported that the revenue from that quarter, which ended on July 31 2020, increased by 355% when comparing it to that quarter from the previous year. This puts Zooms shares at an increase of 369% since the beginning of the year. This means Zoom’s shares from the beginning of the year are currently booming.
Let's set up an example to see the profit increase of those that invested in Zoom stock on December 31st of last year. On December 31st 2019, the price of one share was $68.04. Therefore, if a person bought ten shares on December 31st, it would have cost $680.40. However, the current price of one share is $399.90. This means, if that person still owned their ten shares, their shares would have a value of $3,999. Giving them a profit of $2638.56 if they were to sell their shares. Therefore, this is why though the world may be thankful for the connections that Zoom has allowed us to share via the internet during our pandemic, Zoom shareholders are the most thankful for Zoom this year because of the vast money it has made them.
This image shows the growth of the zoom stock up until its peak period.
However, as of November 10th, according to investors.com, currently Zoom stock is not currently in a buy zone. They explain that buyers should wait for a new base to form. After the news that a vaccine would be released, stocks began to slightly fall, decreasing by 35% from it's all-time high. However, experts believe that even after the covid-19 pandemic, Zoom will continue to be prominent in business and schools. Even with other competitors emerging into the new market such as Microsoft and Google, Baird analyst William Power explained in a report to clients that, “Zoom has established a significant beachhead [to other companies]” and that "Even with a return to more normal lifestyles, we believe there are a plethora of use cases that will continue to resonate for businesses and consumers, significantly expanding the historical total addressable market," (Krause). This shows that consumers should not sell their shares currently, but rather wait because of the prominent way Zoom has changed the ways schools and businesses are run. Therefore, shareholders that are thankful they bought shares early, should not stress if they didn’t sell their shares during the peak of Zoom stock. They can rest knowing Zoom will continue to grow as the market expands. Either way, investing in Zoom early in the pandemic has made many thankful to Zoom for more than just the connections it allowed.
Works Cited
Hayes, Adam. “A Breakdown on How the Stock Market Works.” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/articles/investing/082614/how-stock-market-works.asp.
Jordannovet. “Zoom Shares Soar after Revenue More than Quadruples from Last Year.” CNBC, CNBC, 1 Sept. 2020, www.cnbc.com/2020/08/31/zoom-zm-earnings-q2-2021.html.
Krause, Reinhardt. “Is Zoom Stock A Buy Right Now? Here's What Earnings, Charts Show.” Investor's Business Daily, 10 Nov. 2020, www.investors.com/news/technology/zoom-stock-buy-zm-stock-sell/.
Levy, Ari. “Here Are Incredible Stats about Zoom Following Its Blowout Earnings Report.” CNBC, CNBC, 1 Sept. 2020, www.cnbc.com/2020/09/01/here-are-incredible-stats-about-zoom-following-its-blowout-earnings-report.html.
Sun, Leo. “Where Will Zoom Video Communications Be in 1 Year?” The Motley Fool, The Motley Fool, 4 Sept. 2020, www.fool.com/investing/2020/09/04/where-will-zoom-video-communications-be-in-1-year/.
It's no surprise that the zoom stock would sky rocket during the pandemic with the demand for virtual communication. I didn't even know zoom existed before we all went into lockdown. I'm also sure that the people at zoom had no idea what was coming that that zoom was the new thing to use during the pandemic.
ReplyDeleteI think that Zoom is a great example of how risking your assets on a relatively unknown company can really pay off in the end. Think of everyone who invested in Google and Apple back when they were small businesses...this is the beauty of the stock market. While it's not always going to work out like this, a scenario like this is every investor's dream.
ReplyDeleteI knew a bit about the stock market but having zoom as an example made it a lot easier to learn more about it. But how would someone know/expect the stock to go up for a certain business? Is there a way to predict that? I figured zoom grew a lot but I had no idea it grew 569% that is crazy to think about, but it is the sight that most people use and this pandemic has swept the world. So I can imagine all the people using it.
ReplyDeleteIt's important to remember though that those people who have an expensive zoom stock won't see any from from that stock until they sell it. You can own a stock worth $400 sure, but unless there's someone willing to buy it you'll never see that $400.
ReplyDeleteZoom is the prime example of what effect the real world has on the stock market. The stock market is usually based on how a company is doing and how their company is profitting but when it comes down to it, what is happening in the real world is the perfect example as to how it continously affects the stock market. Zoom was nothing prior to covid but now that schools and businesses are using it for face to face communication, it sky rocketed because of the needs the real world problems brought it. Therefore, would you have risked putting money in this company even when Covid was being named "nothing to worry about?"
ReplyDeleteIt's not surprising that Zoom stock exponentially increased over the last year. I never knew very much about the stock market before I read your post. I think that when investing in stock, you really have to pay attention to all businesses out there to make an informed decision. What companies do you think that you would invest in the future, or do you even plan on investing in any businesses?
ReplyDeleteI definitely plan on investing in the stock market once I am older and have a sufficient, steady income. However, I do not know which businesses I plan on investing in, in the future, because the stock market is always changing and new companies are always being created. Therefore, I cannot say currently what I will invest in, but when the times come to invest, I must do research to see which business are predicted to do well and grow.
DeleteHonestly, I didn't even know that Zoom was a thing prior to Covid 19, so it is surprising that it got so big. I wonder if anyone, upon seeing the news of Covid when just starting, were able to predict that a pandemic would spread, then went to buy Zoom stocks. That would be an interesting thing to look up, and would show just how far stock investors can go sometimes. I've always found investing interesting, and that would just add another level of complexity of investors went through that level of prediction.
ReplyDeleteIt's crazy to think just how much stocks can be worth if you put them in the right company, and how so few stocks could make you so much money.
ReplyDeleteThis is so interesting to see a direct correlation between the pandemic and how quickly Zoom grew as a company and as a commodity for people around the world because of what we needed at the time. That example used with the 10 stock was an incredibly useful instance of this, but my question is how exactly in tune to the stock market does one have to be in order to actually make these risky high-reward profits? Because it appears that once something starts going up in value, those who do watch it closely will have bought up all the remaining available stock they can afford, so I'm assuming that's why investing early is a much better idea?
ReplyDeleteAlthough Zoom is the most prominent online communication service, as you mentioned Google and Microsoft, has their stock increased somewhat due to their communication services, or was it mainly Zoom's service that drastically increased their stock?
ReplyDeleteZoom went very quickly from flying under the radar to involved in most schools and a lot of businesses. Reading your article really showcased how most businesses saw a dramatic drop in stock value during the COVID-19 crisis, there were some companies that flourished and grew instead.
ReplyDeleteThis blog post made me wish that I would have invested in Zoom stock before last year. Before we started to use zoom for school I had never heard of it, and then its stock increased by over 100 dollars per share. I thought that was very interesting. One question and concern that I would have as an investor is what happens after the pandemic and students and people in the workforce go back to school and work fulltime? Will the people that have invested in Zoom lose all of there money if they do not sell before the price drops? Or will the stock price of Zoom keep moving up? My guess is that it would go back down, but the stock market and stock prices are unpredictable.
ReplyDeletewhen the pandemic forced everyone to quarantine into their homes,
ReplyDeletePremium Casino
AS Casino
I believe that the zoom stocks would will go up but much much slower. The Zoom Stocks skyrocketed because of Covid-19. If i know that there was going to be a pandemic and that everyone was going to use zoom i would probally make my parents invest into the zoom stocks. There is only one question that i have and that is how will the zoom stocks be effected when covid-19 starts to go away.
ReplyDeleteI think that this is another great example about how unpredictable certain stocks can be. Not many people predicted a worldwide pandemic, and because of that, people got lucky with stocks. You can mitigate this through thourough research of stocks to figure out what YOU think is the best option
ReplyDelete