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Can Zoom Thrive in a Post-Pandemic World?

By Matthew Frankel, CFP® and Brian Withers - Feb 8, 2021 at 6:08AM

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The videoconferencing king is one of the best performing stocks of the COVID pandemic, but what about when life returns to normal?

Zoom Video Communications (ZM 4.55%) has been one of the biggest winners in the remote-work and stay-at-home world of the COVID-19 pandemic, with shares up more than 350% over the past year. But what about after life returns to normal? In this Fool Live video clip, recorded on Jan. 25, contributor Brian Withers talks about what tricks Zoom might have up its sleeve to keep its momentum going. 

Brian Withers: Let me jump on with Zoom, and I'll see if we can speed this up. If you hadn't heard, Zoom had a capital raise, and it started out, they announced it was $1.5 billion, and then it turned out they raised it to $1.75 billion, and then they raised it again. It finally went through for $2 billion. So one, good news: Zoom stock is pretty popular.

The other thing is this more than doubles their cash balance and gives them tons and tons of optionality, whether it's investing in their products, potentially doing tuck-in acquisitions, or just giving them cash to do some more marketing potentially. The Zoom phones are zooming off the shelf and in a pandemic, they've sold a million so far. It's only been out for about a year, and they've installed a million phones. This is a great way for offices and businesses to integrate Zoom and become more deep into their ecosystem.

The stock has pulled back about 30% from its high in October. So if you're looking for a time to get in, it might be a good time. Earnings won't be until March. Their quarter doesn't end for until the end of January.

I'm looking, as businesses come back to work, Zoom has already released some innovations that allow hybrid workplaces to show up. Whether you're in the conference room or whether you're at home, everybody is going to get a square to make Zoom...a way to do meetings even in a hybrid environment. Their goal is to make Zoom meetings better than in-person meetings, and I think they are along their way. Look for Zoom rooms. They've even got virtual receptionists now, and I'll be watching to see what they do with this cash.

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