The technology sector is taking an unusually prolonged beating this year. Even the biggest names are getting tossed around like rag dolls. The Nasdaq-100 index, comprised of the 100 largest companies on the exchange, is down a stunning 32.4% since the end of 2021.

Tech stocks that soared in the early days of the COVID-19 pandemic have been hit hardest. Few have been hit harder than Zoom Video Communications (ZM 1.23%). Shares of the stock have collapsed around 86.9% from their peak in 2020.

Zoom's stock price may have gotten way ahead of itself in 2020. The losses it's suffered since, though, have gone several steps too far. Now, you can scoop up shares of Zoom for just 20.3 times adjusted earnings expectations for the fiscal year that ends on Jan. 31, 2023.

Smart investor looking at device.

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A tremendous bargain

At the moment, the average stock in the Nasdaq-100 index trades at 20.8 times forward-looking earnings estimates. This means the market expects Zoom to grow a bit more slowly than the average stock in the Nasdaq-100 index.

Top-line revenue during the fiscal second quarter rose 8% year over year to $1.1 billion. This isn't amazing, but it's important to remember just how fast this business has grown on a longer timeline. Over the past three years, Zoom's total revenue stream has expanded at a stunning 96.1% compound annual growth rate.

The COVID-19 pandemic sent most businesses scrambling to find the work-from-home solutions that Zoom was already providing. So you might be surprised to learn that most of those businesses have stuck around, and new ones keep climbing on board. The company reported a 120% net dollar expansion rate among its enterprise customers during the three months that ended July 31, 2022.

Why Zoom's stock price is down sharply

Zoom isn't immune to macroeconomic pressures, including the war in Ukraine and the subsequent energy crisis that it's causing in the EU. Tack on a strengthening dollar, and it's no wonder that revenue from the geographic segment that includes Europe slid 8% year over year during the second quarter.

In addition to pressure in Europe, the company's also seeing significantly less demand from individuals and small businesses now that it's a lot safer to meet in person. As a result, the company slightly missed its own revenue estimate when it reported fiscal second-quarter results in August.

Markets despise uncertainty, so it's no wonder that Zoom's stock price was thrashed after the company missed its own revenue estimate. Investors will be glad to learn that a shifting revenue mix should improve visibility from now on.

Winning over enterprise clients

Zoom wants to be a lot more to its clients than just a provider of online meeting software. To this end, it has launched Zoom Rooms, Zoom Phone, Zoom Contact Center, and Zoom IQ for Sales. All these initiatives are gaining traction, with amazing results from Zoom Phone in particular. In the second quarter, the number of customers with 10,000 or more paid seats more than doubled year over year. Despite launching Phone less than four years ago, Zoom's enterprise clients are already paying for over 4 million seats.

Now that it's generally safe to meet in person, individuals and smaller businesses are thinking twice about paying for Zoom's services. It's a different story among its most important customers. In the second quarter, revenue from enterprise clients, who will likely prove more reliable than nonenterprise customers, rose 27% year over year.

Without another novel new virus to keep us all at home, the enormous gains Zoom reported in 2020 probably won't repeat themselves. Strong uptake among the company's more reliable enterprise clients, though, means we can expect relatively reliable cash flows. That makes this stock look like a buy at its knocked-down price.