Zoom stock price tumbles 15% as analysts fret over slowing growth, BTIG downgrades
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Zoom Video Communications (NASDAQ:ZM) plunged nearly 15% on Tuesday after the communications software company reported second-quarter results that missed estimates and provided soft guidance, prompting several Wall Street analysts to fret over slowing growth.
JMP Securities analyst Patrick Walravens, who has a market perform rating on Zoom (ZM), noted that the company has "terrific easy-to-use products," but overall revenue results are getting worse, as online sales fell 9% year-over-year, worse than the 2% decline seen last quarter.
Walravens lowered his full-year earnings estimates for the next three years to $3.69, $3.28 and $3.29 per share, down from $3.72, $3.99 and $4.20 per share, respectively. 
Citi analyst Tyler Radke said the company appears to be "stuck in the waiting room" after issuing its financial results, as continued headwinds for its online and SMB segments impacted results, as did foreign exchange headwinds. 
"Although operating income and EPS beat, [free cash flow] missed with annual [free cash flow] guidance ~20% below the street, making shares look much less cheap," Radke wrote in a note to clients. 
He added that the quarterly results showed many of the concerns that drove the firm's recent downgrade, but Citi actually "underestimated the severity," while noting Zoom's (ZM) outlook was "much worse than we feared."
Zoom (ZM) said on an adjusted basis, it expects to earn between 82 and 83 cents per share for its third quarter, on revenue in a range of $1.095B to $1.1B. During the third quarter of 2021, Zoom (ZM) earned $1.11 a share, excluding one-time items, on revenue of $1.051B.
For the period ending July 31, Zoom (ZM) said it earned $1.05 a share, excluding one-time items, on revenue of $1.1B, compared to analysts' expectations for a profit of 93 cents a share, on $1.12B. During the same period a year ago, Zoom (ZM) earned $1.36 a share, excluding one-time items, on $1.02B in revenue.
BTIG analyst Matt VanVliet downgraded Zoom (ZM) to neutral from buy following the results, noting the continued macro headwinds the company is likely to keep facing, including its online business and continued pressure in the EMEA region. 
"Overall, the pullback in [fiscal 2023] profitability and [free cash flow] is somewhat concerning as topline growth slows further, and thus we are downgrading shares of [Zoom] to Neutral given significantly reduced near-term expectations," VanVliet wrote in a note to clients. 
Hedge fund Tiger Global Management recently disclosed that it exited its stake in Zoom (ZM) during the second-quarter, along with several other changes to its portfolio.
Analysts are largely positive on Zoom (ZM). It had an average rating of BUY from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Seeking Alpha's quant system, which consistently beats the market, rates ZM a HOLD.