What happened
Companies often benefit when a big peer is cut down to size, and that was the case with several specialty tech stocks on Tuesday. One of these was Zoom Video Communications (ZM 1.57%), which saw its shares outperform the slumping S&P 500 index by rising nearly 2.2% against the index's 0.4% fall.
So what
The peer in question in Zoom's case is ever-mighty Microsoft (MSFT 1.82%).
Last Friday, under pressure from the competition-sensitive European Union (EU), the tech giant announced it would essentially unbundle its Teams productivity and communications app from the Office software suite. Starting Oct. 1, it will allow EU customers to subscribe to Office without Teams; the latter will be priced at 2 euros ($2.16) per month as an optional add-on.
This move is seen as favorable to smaller, more specialized tech companies that could benefit from the EU putting the squeeze on sprawling giants like Microsoft. In a new research note on Zoom published Tuesday morning, BTIG analyst Matthew VanVliet argued that the ruling impacts video- and voice- conferencing software providers competing with Teams.
"We view this as a win for any MSFT Teams competitor with Zoom being the most likely to benefit from any ripple effect this may create for European businesses that will finally have the option to jump ship and board a more user-friendly platform," he wrote.
Now what
This doesn't necessarily mean that investors should pile into Zoom and other teleconferencing stocks, however. In the note, VanVliet reiterated his neutral recommendation on the stock, as he wrote that Microsoft's move doesn't have an "immediate impact" on his estimates for Zoom.
