The pandemic isn’t over, but the pandemic economy might be.
Zoom became a household name in March 2020 as millions of people were suddenly forced to work from their kitchens and bedrooms. Although video conferencing was far from a new technology, Zoom became the preferred application for almost every form of workplace communication.
Just over two years later, travel restrictions are easing, the tech market is sagging amid rising interest rates, and Zoom’s stock price has fallen to pre-pandemic levels, down 83% from its all-time high in October 2020.
What happened to Zoom?
Videoconferencing emerged in the late 1990s with the introduction of WebEx (owned by Cisco since 2007) and was popularized for consumers through Skype (now Microsoft-owned) and Apple’s iChat. But in March 2020, Zoom found itself in the right place at just the right time.
When the pandemic hit the US, Zoom usage soared overnight—the software was ubiquitous for anyone working a desk job, or trying to stay connected to friends and family while social distancing. People even got married on Zoom. All that translated to the company’s bottom line: Sales were up 326% in 2020, to $2.6 billion, while profits rose to $672 million, from just $22 million in 2019.
While virtual-work competitors like Google (Google Meet) and Microsoft (Teams and Skype) offered similar products, Zoom represented a pure-play investment opportunity for investors seeking exposure to the budding remote work revolution. The company offers a free version of its product to consumers (with time restrictions on calls) but makes money through business-to-business sales.
Zoom’s stock shot up during the first year of the pandemic: from $89 a share on Feb. 7, 2020, to a high of $559 in October. The mania was so dramatic that other publicly traded companies with Zoom-like names saw their stocks pop, too.
Tech stocks are in freefall
Since the beginning of this year, Zoom has lost about half of its market capitalization—dropping from $54 billion to $27 billion alongside a declining stock market.
Nor is Zoom the only pandemic darling to lose its shine: Since the beginning of 2022, Peloton is down 55%, Docusign is down 52%, and Netflix is down 68%, the last of these on the news that it’s actually losing subscribers now. Social media companies such as Meta (down 40%), Pinterest (down 40%), and Snap (down 48%) are suffering, too.
Just like the rest of us, it seems investors are experiencing Zoom fatigue attributable to a soured tech market, the threat of competition, and workers returning to the office. But Zoom isn’t alone—pandemic darlings are a thing of the past.