Zoom hit a 52-week low last week amid a post-pandemic hangover. Is it time to buy?
Kena Betancur/Getty Images News

Pandemic play Zoom Video Communications (NASDAQ:ZM) has fallen out of favor amid concerns about slowing sales growth and increasing competition, but has the sell-off been justified? Is the stock now a buy?
Shares hit a 52-week low
Shares of Zoom hit a 52-week low last week of $134.70. After a meteoric rise during the height of the pandemic, Zoom shares began trending lower in August 2021. The stock has plunged 60% over the past 12 months and has fallen 16% since the beginning of the year.
Wall Street analysts, on average, have a buy rating on the stock. Of the 28 analysts tracked by SA over the past 90 days, 10 rated it a strong buy, 5 a buy, 12 a hold and 1 a sell. SA authors, on average, have a hold rating on the stock.
SAâs Quant rating is also a hold. While Zoom earned an A+ for growth and profitability, the company received a D+ for valuation and an F for momentum.
Concerns over growth, competition
Zoomâs main problem has been concern that it wonât be able to sustain the strong growth it saw during the height of the pandemic, when offices and schools scrambled for video conferencing services.
The stock has fallen steadily since the company released its Q3 earnings report which showed that sales grew by 35% for the quarter from the prior year, compared to growth of 54% for Q2.
Also worrying investors is increasing competition from companies like Microsoft, which is now including Teams, a product that also offers video conferencing, in its latest rollout of Windows. Microsoft also recently announced that it was offering a version of Teams for small business for significantly less than a small business service offered by Zoom.
Morgan Stanley said in a recent note that growing interest in Teams isnât leading to Zoom cancellations and that it believes Zoomâs position has been underappreciated by the market.
âWe think Zoom has won a leadership share in the enterprise video conferencing market with competitors still unable to offer the same seamless, easy-to-use experience,â Morgan Stanley said in a note released in mid-December. âWhile SMB business is likely to stagnate given more sensitivity to in-person meetings, we believe video conferencing in the enterprise is here to stay in some capacity.â
SA authors have been mixed on Zoomâs prospects.
SA contributor Mike Thomas asserted recently that âthe market has learned the wrong lessons from the days of frothy valuations and underappreciated the extent of Zoomâs promise and the uniqueness of what Zoom brings to an investor.â
Fellow contributor Moat Investor, meanwhile, is bearish short-term but more bullish long-term. âEven though current valuations offer no upside, new uses added to Zoom can unlock value. We believe that the significant downside of Zoom is in the past.â