Zoom (ZM 1.73%) was arguably the biggest winner from the pandemic, becoming not only an indispensable tool for schools and businesses but also a household name. The company has built an easy-to-use video conferencing app that's attracted millions of users, and Zoom's revenue is up around 10x in the last three years as a result. 

So why is Zoom's stock down 42% from its all-time high, and in freefall after another strong quarterly report? A big reason is that growth is slowing to a halt at Zoom. After reporting second-quarter 2021 revenue of $1.02 billion, up 54% from a year ago, management expects revenue of $1.015 billion to $1.02 billion in the third quarter. That's potentially a decline sequentially, which is terrible for a growth stock trading for 24 times sales.

These may be early signs that Zoom is finding it hard to grow its footprint in enterprise markets, and its best option may be to simply sell to a bigger rival. Here's why I think selling would be the best option for Zoom long-term, plus three potential buyers who could use Zoom in their portfolios. 

Person on video call at home.

Image source: Getty Images.

Observe, copy, crush

When technology companies see a successful product, they often copy it as quickly as they can. Video chat and conferencing aren't new, but Zoom became a verb when the pandemic started, putting a new focus on the service. Soon Alphabet's (GOOG -0.28%) (GOOGL -0.27%) Google Meet, Microsoft's (MSFT -0.25%) Teams, and Facebook (META -2.70%) Workrooms tried to wedge their way into the action. As hard as they tried, Zoom remained the dominant name in mid-2020. 

As enterprises began to figure out that working from home was going to continue, however, their business platforms began to include video more often. If your company uses Teams at work, you probably use Teams for video. If your school is a Google school, it probably uses Google Meet for video calls. As these big enterprises saw the success of Zoom, they copied parts of its product and folded video conferencing into their suite of tools, hoping to wedge Zoom out of the market. 

Zoom's slowing growth is a sign that both workers are going back to the office and that big tech's assault on its business is starting to take hold. The video conferencing company isn't part of a big suite offered by a big tech company that will be maintained long after the pandemic ends. And that's exactly why I think it's a perfect buyout target now that the stock has come off its highs. 

The company that needs Zoom most

Despite dominating social media, Facebook has struggled to enter the enterprise market in a meaningful way. I highlighted last week that Facebook is trying to make its VR collaboration app Workrooms an enterprise solution that augments its Slack-like platform called Workplace for businesses. But neither has anywhere near the name recognition as Zoom. 

If Facebook could acquire Zoom and leverage it to become an enterprise solution, it could develop Workplace and virtual reality for serious business use. There's no guarantee that businesses would be excited to add Facebook as an enterprise solution, but this could be a big foot in the door -- and if Facebook truly has enterprise dreams, it may need to make a big move to get into the market. 

Entrenching the enterprise giant

I mentioned that Microsoft already has a big presence in enterprise video conferencing, but buying Zoom would make it the dominant player. And unlike Facebook, Zoom would fold into Microsoft's existing services very nicely. 

One benefit I could see for Microsoft is that Zoom is a simple-to-use tool for small businesses that may not be using most of Microsoft's products today. Free-to-use and low-cost Zoom accounts have been lifesavers during the pandemic, and those small businesses may be a growth engine for technology companies long-term. 

While it may make a lot of sense for Microsoft to buy Zoom, the company may also decide it's fine just slowly adding features to Teams and pushing Zoom out of its customers' workflow that way. Teams is clearly a product Microsoft is trying to grow and add features to, and as a leader in the enterprise market, it could choose to grow the product more organically. 

Another enterprise tool in the toolkit

Another enterprise giant that may see value in Zoom is Salesforce. The company acquired Slack in order to enter the enterprise communications market, and Zoom integrates into Slack already -- and could further entrench Salesforce as a business app. Like with Microsoft, Slack and Zoom could be a great start to a small business's app suite, creating a feeder pipeline for the Salesforce platform. 

Zoom is actually already integrated into the larger Salesforce platform as well, so bringing the product in-house could bring added benefits. Salesforce could cross-sell products to teams using either product, broadening its potential reach. This could make the entire Salesforce ecosystem more valuable. 

Someone drawing a mural of a large fish about to consume a smaller fish.

Image source: Getty Images.

Zoom's best option

The problem in enterprise software is that companies are looking for fewer solutions and more functionality from the tools they have. If a company is already using Microsoft or Google, it may want to stick to that platform and eventually cut Zoom from its subscriptions, which is a challenge for Zoom as it doesn't have the same suite of solutions to offer as larger competitors. That's why selling to a larger company may be a smart move before everyone else adds the same functionality Zoom has. 

If Zoom's stock continues to fall, I could see it becoming a hot acquisition target. With revenue growth stalling out, Zoom needs to make something happen now or risk being pushed out of the market by bigger tech rivals.