Shares of cloud-based communications expert RingCentral (RNG 4.47%) have fallen 34.1% this year as of today, according to data from S&P Global Market Intelligence. The company exceeded Wall Street's targets in the earnings reports it posted in February and May, but investors still turned away from the soaring growth stock as the business world started calling work-at-home employees back to the office.
Remote-work policies have been a boon for RingCentral during the coronavirus crisis, as the company's all-digital voice and video communication solutions came in handy for getting your job done from the living room or home office. Top-line sales rose 31% year over year in the fourth quarter of 2020, and the growth accelerated to 34% in the first quarter of 2021.
So a return to normalcy looks like a threat to RingCentral's booming business. Widespread vaccinations in the spring pointed to remote work fading away in the near future, driving share prices down even though the reported results were consistently strong.
RingCentral's decline includes an 8% drop today, as video conferencing specialist Zoom Video Communications (ZM 1.35%) is buying Five9 (FIVN 0.87%), a provider of cloud-based call center software, in a $14.7 billion deal. That business combination might tighten the competition for cloud-based calling services, which is RingCentral's home turf. Watching Zoom pick Five9 instead looks like a missed opportunity for RingCentral.
That being said, RingCentral remains a proven leader in the cloud communications sector, and any deal activity could be seen as validation of the digital voice business. Picking up a couple of shares at these lower prices could set you up for solid long-term returns.