Zoom Video Jumps as Purchase of Keybase Seen as Security Booster

Zoom shares gain after purchasing Keybase, which it says offers everything it needs to ensure security on its video-messaging platform.
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Shares of Zoom Video Communications  (ZM) - Get Report rose Thursday after the video-conferencing provider said it has purchased secure-messaging and file-sharing provider Keybase for an undisclosed amount - lifting expectations that it will be able to boost its own security. 

Terms of the deal weren't disclosed. 

Usage of Zoom has soared throughout the coronavirus pandemic as people and businesses have turned to the platform to communicate in real time, but major security flaws including bad actors hacking into conferences have damaged the firm's reputation.

Zoom CEO Erick Yuan said he believes the deal will help the company address this concerns, and then some.

“There are end-to-end encrypted communications platforms. There are communications platforms with easily deployable security. There are enterprise-scale communications platforms. We believe that no current platform offers all of these. This is what Zoom plans to build, giving our users security, ease of use, and scale, all at once,” he said. 

Zoom has a three-month plan to identify, address, and enhance the security and privacy capabilities of its platform. Security has become Zoom’s prime focus during the pandemic.

Last month, the company hired Alex Stamos, the former security chief at Facebook  (FB) - Get Report, as a consultant to help in the effort. And it apologized to customers for falling “short of the community’s — and our own — privacy and security expectations.”

The acquisition of Keybase represents the first made by Zoom in its nine-year history.

Morningstar analyst Dan Romanoff likes the company, but, “we think the rise in Zoom shares is unwarranted, and our … fair value estimate remains unchanged at $62,” he wrote in a report last month.

The stock recently traded at $159.85, up 6.86%. It has soared 85% over the past three months, compared to a 12% drop for the S&P 500.