However, we believe the market has likely priced in further headwinds, which could further delay the inflection point in its SMB/online segment.įurthermore, while its enterprise momentum has been pretty robust in Q2, Zoom will come under pressure to maintain its cadence in H2. It also led to the company revising its Q3 forecasts in August. We believe that the digestion in Zoom's small and medium business ((SMB)) segment is still ongoing, exacerbated by the recessionary headwinds. Notwithstanding, our timing could have been better, given its July surge, but ZM has not convinced us that investors should add exposure even though it has been battered profusely.
In our previous update, we urged investors to sell, suggesting that the stock has not capitulated. (ZM) stock surged to a recent high in July but has since collapsed dramatically, breaking below its May lows. Zoom could continue to struggle even at the current valuations. Given the tech rout, we believe that there are plenty of higher-quality growth stocks in the market. Investors need to ask whether the discount in ZM is sufficient for them to bet on a potential recovery through 2024. Our analysis suggests that the market has likely anticipated further headwinds in its SMB segment, given the recession headwinds. Therefore, it appears the worst is not over yet for Zoom. ZM stock has collapsed dramatically from its recent July highs, decisively breaking below its previous May lows. Zoom: The Struggle Will Likely Continue With The Coming Recession
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