Shares of Zoom Video Communications, Teladoc Health, and LivePerson surged on Monday after investors bet the three companies would do well as remote work and social distancing become the norm as the novel coronavirus spreads globally.
As the outbreak expands in the United States, multiple U.S. states have issued stay-at-home orders, urging residents to cease all non-essential activity. Employees are working from home when possible, driving demand for collaboration tools. The spike in demand may not last once the crisis has passed, but for now investors are placing their bets.
Here's how these three stocks were doing as of 1:50 p.m. EDT:
Zoom Video Communications (ZM 2.06%)
Teladoc Health (TDOC -4.67%)
LivePerson (LPSN 2.10%)
Zoom, which provides easy-to-use videoconferencing software, is a clear beneficiary of increased remote work and social distancing. The company has been adding more capacity to deal with surging demand, installing servers and other equipment in its data centers. Two new data centers will become operational soon, according to CFO Kelly Steckelberg.
Many of the new users are likely using the free tier offered by Zoom, which allows for unlimited one-on-one meetings and a 40-minute limit on group meetings. Some have no doubt opted for a paid subscription to remove limitations, but there's no telling how many will stick around once the crisis is over.
Zoom was growing fast before the virus broke out, with revenue rising 88% in 2019. The company will certainly benefit in the near term from the pandemic, but the jury is still out on whether any of this will matter in the long run.
Teladoc provides a platform for patients to visit healthcare professionals virtually. The company recorded a 50% surge in visits in the week ending on March 13, a clear sign that telemedicine is quickly growing in popularity amid the COVID-19 crisis.
Telemedicine allows patients to access healthcare professionals without traveling, eliminating the risk of both catching the novel coronavirus and spreading it. It's particularly important to prevent healthcare professionals from being infected, as they're on the front lines of the pandemic.
Teladoc was also growing quickly before the viral outbreak, although not as quickly as Zoom. Sales were up 32% in 2019, with both subscription and visit fee revenue surging. While the short-term boom in demand may fade after the crisis, it may help accelerate the adoption of telemedicine in the long run.
LivePerson may also benefit from the pandemic. LivePerson provides a conversational platform that allows companies to answer customers' questions using common messaging channels like SMS, Facebook Messenger, and WhatsApp. LivePerson supports AI-powered chatbots, allowing for nearly 70% of consumer inquiries to be automated. This can reduce the need for customer support staff.
Operating a call center, which puts many customer service employees under one roof, is a big risk during a pandemic. By offering solutions to operate call centers remotely, and to push off as much work as possible to AI-powered bots, LivePerson could see a surge in demand during this difficult time.
While demand for workplace collaboration tools, telemedicine services, and customer service automation software is understandably rising during the COVID-19 pandemic, it's not clear whether that demand will stick around after the crisis is over. Any growth boost enjoyed by these three companies may be short-lived.
On the other hand, the pandemic could accelerate adoption of these technologies, which could give these companies a long-term tailwind. That would be great news for long-term investors.