As you can see from the above graph, its stock price has dropped from its highs in mid-October, and the shares’ advance seems to have slowed considerably.

However, things have taken a turn for the worse for the stock since mid-October. Its gross margin came in at 66.7% last quarter, down from more than 80% in the previous quarters. Moreover, Zoom’s gross margins also took a hit in Q3, primarily because it spent money to expand its cloud services. In Q3, its revenue rose 16% versus Q2, and its sequential growth is expected to slow further in Q4. In Q1 and Q2, its top line increased about 68% versus the previous quarters. However, Zoom expects its sequential revenue growth to slow. For Q4, the company is projecting revenue of $806 million to $811 million and EPS of 77 cents to 79 cents. Lockdown restrictions and the resulting surge of online communication boosted Zoom’s annualized revenue growth to 367%. As of the end of Q3, it had 1,289 customers that had paid the company $100,000 or more over the previous 12 months. Moreover, its earnings per share, excluding certain items, of 99 cents beat the average outlook of 76 cents by a healthy margin as well. It reported revenue of $777.2 million in the period, comfortably beating the mean estimate of $694 million. Judging from Zoom’s stellar Q3 results, it seems the company was doing extremely well last quarter. Though the recovery of air travel will be sluggish, it’s likely to pick up massively once the vaccine is widely available, resulting in a bumpy road ahead for Zoom stock. Due to the advancement of the Covid-19 vaccines, analysts’ average estimates for Zoom have also dropped. On Thursday, the stock closed roughly 57% below its 52-week high of $589. The shares have started to slow down, dropping more than 20% in the past couple of months. So with its bloated valuation and a slowdown in its top-line growth expected next year, Zoom stock is unattractive at this stage. However, the stock still trades at 30 times analysts’ average 2021 sales estimate, dwarfing the average valuation of its sector. Zoom’s revenue growth is expected to slow down in 2021, as corporate air travel starts picking up again.

Zoom stock price