Videoconferencing platform Zoom Video Communications (ZM) - Get Zoom Video Communications, Inc. Class A Report is mulling developing its own corporate e-mail and calendar services, The Information reports, as the stock market darling seeks to spread its wings.
But the news didn’t help Zoom Video shares Wednesday. They sank 5.67% to trade at $385.80 on Wednesday afternoon. But the stock has still skyrocketed 318% year to date. The company has benefited from families, friends and companies using its service to communicate during the Covid pandemic while they stayed at home.
Zoom Video has already begun work on the e-mail service and may begin testing it early next year, according to The Information. The calendar is less advanced, and work may not have even started on it yet.
The additional services would allow Zoom Video to compete with bigger companies such as Microsoft (MSFT) - Get Microsoft Corporation Report and Alphabet (GOOGL) - Get Alphabet Inc. Class A Report that combine their e-mail and calendar services into their videoconferencing platforms.
Morningstar analyst Dan Romanoff sees promise in Zoom Video, but says it’s astronomically overvalued, putting fair value for its shares at $176.
“We see a long runway for growth as the company gains traction with Zoom Phone and evolves its main application to a communication platform, and we are impressed by management’s ability to over deliver in terms of both growth and margins,” he wrote in a commentary last month.
Still, “while we see some evidence of switching costs, the company is still in the early stages of its life cycle, and we do not yet have enough confidence in its ability to earn excess returns on capital over the next decade to warrant a narrow moat rating,” Romanoff wrote.