What Happened?
Shares of video communications platform Zoom (NASDAQ: ZM) jumped 2.6% in the afternoon session after the company announced its AI-powered cloud phone system, Zoom Phone, surpassed 10 million seats globally.
This achievement marked a significant milestone for the service, which launched in 2019 and became one of the fastest-growing cloud telephony solutions. The growth highlighted a global shift by businesses away from older, fragmented phone systems toward more integrated and adaptive communication tools. According to the company, organizations using Zoom Phone experienced benefits such as easier management, reduced costs, and improved interactions driven by artificial intelligence.
After the initial pop the shares cooled down to $81.44, up 2% from previous close.
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What Is The Market Telling Us
Zoom’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 10.8% on the news that the company reported second-quarter financial results that beat analyst expectations. The company's revenue grew 4.7% year-over-year to $1.22 billion, its fastest pace in 11 quarters, while adjusted earnings per share of $1.53 also surpassed estimates. The company also raised its full-year guidance for both revenue and adjusted EPS. The solid results prompted at least one analyst to become more bullish on the stock's prospects. Following the report, RBC Capital raised its price target on the stock to $100 from $95, maintaining an Outperform rating. The strong earnings and positive analyst sentiment fueled the stock's upward momentum.
Zoom is flat since the beginning of the year, and at $81.44 per share, it is trading close to its 52-week high of $89.03 from November 2024. Investors who bought $1,000 worth of Zoom’s shares 5 years ago would now be looking at an investment worth $165.39.
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