Zoom Shrugs Off First Bear Call as Shares Extend Rally
Zoom Gets First Bear as Summit Says Stock Can't Fight Gravity
(Bloomberg) -- Zoom Video Communications shares rallied on Monday, with the newly public company extending its massive first-day rally despite receiving its first bearish call from an analyst.
Shares climbed as much as 11 percent in afternoon trading, shrugging off an earlier decline of as much as 2.8 percent.
Summit Insights Group started coverage on the company with a sell rating and $45 price target. That made for the third analyst call on the stock, according to Bloomberg data; two firms have buy ratings.
“Market trends, hyper competition, and a limited moat make for exceptional and more challenges ahead than strengths,” analyst Jonathan Kees wrote to clients. The firm forecast a “rapid deceleration in sales growth,” and wrote that it could defy gravity “for only so long.” It described the company’s first-day trading activity -- when shares ended up more than 70 percent -- as the stock being bid up “in a frenzy.”
Zoom has “a great video product and the rarity of being profitable and [cash flow] positive as an IPO company, [but] we cover cloud communication peers who also have great products and financials,” Summit wrote.
To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm, Morwenna Coniam
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