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Why Zoom Video Stock Fell 14% in March

By Beth McKenna - Apr 2, 2021 at 10:37PM

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Investors are concerned that the video conferencing specialist's business will suffer once the COVID-19 pandemic ends.

What happened

Shares of Zoom Video Communications (ZM 5.61%), a video-first unified communications platform provider, fell 14% in March, according to data from S&P Global Market Intelligence.

For context, the S&P 500 index returned 4.4% last month.

A woman on her laptop participating in a Zoom group meeting.

Image source: Zoom Video Communications.

So what

We can probably attribute Zoom stock's weak performance last month to two related factors, one largely market-related and the other more company-specific.

Shares of many highly valued growth stocks pulled back last month, so Zoom stock wasn't unique on this front.

More specific to Zoom, many investors are no doubt concerned that the video conferencing specialist's business will suffer once the COVID-19 pandemic ends. So shares have been declining since the fall when the good news about vaccines started rolling out.

Indeed, the company's guidance for fiscal 2022, which it issued on March 1 when it released powerful fourth-quarter and full-year results for fiscal 2021, suggests management expects a significant slowdown.

ZM Chart

Data by YCharts

Now what 

For full-year fiscal 2022 (which began on Feb. 1), management expects revenue of $3.76 billion to $3.78 billion and adjusted earnings per share of $3.59 to $3.65. At the midpoints, this outlook represents year-over-year revenue and adjusted EPS growth of about 42% and 8.4%, respectively.

For context, in fiscal 2021, Zoom's revenue soared 326% year over year to $2.65 billion, and adjusted EPS increased nearly tenfold to $3.34. 

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