Zoom Video Communications (NASDAQ:ZM) was one of the hottest growth stocks of 2020. The video conferencing platform provider's stock started the year trading in the high $60s but skyrocketed to nearly $570 a share by October after the pandemic turned the company into a household name.

Zoom Video's share price subsequently dropped back to the $400s as new vaccines curbed the market's appetite for stay-at-home stocks. But does that retreat signal a buying or selling opportunity for Zoom's investors? Let's take a look back at Zoom's performance over the past year to find out.

Zoom's video conferencing software being used in a meeting room.

Image source: Zoom.

How fast did Zoom Video grow this year?

Zoom's revenue rose 88% to $622.7 million in fiscal 2020, which ended on Jan. 31. Its adjusted net income surged 514% to $101.3 million. Those numbers were already astounding, but the pandemic caused Zoom's growth to accelerate to jaw-dropping levels this fiscal year:

Growth (YOY)

Q1 2021

Q2 2021

Q3 2021

Revenue

169%

355%

367%

Adjusted Net Income

555%

1,045%

1,079%

Source: Zoom Video Communications. YOY = Year over year.

Zoom's meteoric growth was driven by a shift toward remote work, online education, and online social visits throughout the pandemic. The platform's simplicity and the lack of strings tethering users to bigger tech ecosystems amplified its appeal.

It's also locking in bigger companies. At the end of fiscal 2020, its number of customers contributing over $100,000 in trailing 12-month revenue rose 86%, while its number of customers with more than 10 employees grew 61%. Those two key metrics accelerated significantly in 2021:

Growth (YOY)

Q1 2021

Q2 2021

Q3 2021

Customers contributing over $100,000 in TTM revenue

90%

112%

136%

Customers with more than 10 employees

354%

458%

485%

Source: Zoom Video Communications. YOY = Year over year.

Those growth rates indicate Zoom Video's privacy and security issues over the past year -- which included strangers "zoom-bombing" calls, an initial lack of end-to-end encryption, and its use of Chinese servers -- didn't significantly tarnish its brand.

For the fourth quarter, Zoom expects its revenue to rise 328%-331% year over year as its adjusted EPS grows 413%-427%. For the full year, it expects its revenue to rise 314% and for its adjusted EPS to jump 726%-731%.

But what about the post-pandemic world?

Zoom Video's growth throughout the pandemic was impressive, but it will likely struggle to maintain its momentum after the crisis ends and people return to work and school.

Zoom's software running on a laptop.

Image source: Zoom.

It will also likely face more competition from Cisco's (NASDAQ:CSCO) Webex, Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Meet, Facebook's (NASDAQ:FB) Messenger Rooms, and Microsoft (NASDAQ:MSFT) Teams. All these larger tech companies can afford to run their video conferencing services at losses to gain ground against Zoom.

Google has already integrated Meet into Gmail, Facebook lets users launch Rooms from its main app and Messenger, and Microsoft recently started offering free all-day video calls on Teams "until further specified."

Zoom isn't sitting still as those rivals close in. It's broadening its ecosystem with new features -- including its OnZoom platform for online events, Zoom Phone for calls without video, its Zoom Chat messaging app for businesses, cloud recording tools, and bundles of tools for specific industries. Those new features might lock in customers and widen its moat, but it's unclear if they can help Zoom maintain its momentum in a post-pandemic world.

For now, analysts expect Zoom Video's revenue and adjusted earnings to rise 38% and 3%, respectively, next year. Based on those estimates, Zoom's stock looks incredibly pricey at 33 times next year's sales and 137 times forward earnings.

By comparison, the connected exercise bike maker Peloton Interactive (NASDAQ:PTON), another stay-at-home winner that faces less competition than Zoom, is expected to grow its revenue and earnings by 33% and 97%, respectively, next year. But its stock trades at just six times next year's sales and 166 times forward earnings -- which might make it a better speculative growth play than Zoom.

Is it time to take profits in Zoom Video?

If you've been invested in Zoom Video since the beginning of the year, it's probably a good idea to lock in some profits before the pandemic ends. It's had a great run this year, but it's doubtful it can replicate those gains in a post-pandemic world next year.

Zoom's stock might still rise higher over the long term, especially if it can squeeze out more revenue per customer by expanding its communications ecosystem, but its valuations are just too hot to handle right now.