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Why Zoom Stock Jumped Today

By Joe Tenebruso – Updated Sep 22, 2020 at 7:08PM

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Surging coronavirus case counts could fuel demand for video conferencing software.

What happened

Shares of Zoom Video Communications (ZM 0.16%) climbed 5.2% on Tuesday as COVID-19 continues to spread around the world at an alarming rate.

So what

Nearly 7 million Americans have contracted the dangerous disease, and more than 200,000 have died. Worldwide, those figures stand at 31.4 million and 967,000, respectively. Outbreaks in Europe are forcing government officials to consider new lockdown measures. Health experts in the U.S. are warning of an even higher rate of infections as we approach the winter. 

"We're only seeing the tip of the iceberg," New York City health official Dr. Syra Madad told CNBC on Tuesday. "We're only nine months into this pandemic." 

A person is pointing to an upwardly sloping line that's above a downwardly sloping line.

Zoom Video Communications' shares rose on Tuesday. Image source: Getty Images.

These disturbing trends are driving investors to seek shelter in stay-at-home stocks, of which Zoom is one of the more popular. As a leading provider of cloud-based video communications, Zoom is seeing demand for its services boom during the coronavirus pandemic.

Now what

Zoom's growth has been breathtaking. Its second-quarter revenue surged 355% year over year to $663.5 million as businesses flocked to its platform. Better still, Zoom is becoming more profitable as it scales its operations; its adjusted operating profit rose more than 13-fold, to $277 million. 

With the pandemic showing little sign of abating anytime soon, demand for Zoom's video technology should remain strong in the quarters ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool has a disclosure policy.

Stocks Mentioned

Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$72.47 (0.16%) $0.12

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