Examining a stock down 90%... is a rebound ahead?

According to the calendar, the COVID pandemic started more than 5 years ago… sometimes I feel like it was just yesterday.

But, for one company and its investors, the COVID pandemic probably feels like a lifetime!

This one company saw its stock price rise over 500% in the first 9 months of 2020.

The following two years, investors watched the stock fall from its lofty spot… returning right back to where it started!

I bet investors probably miss those early pandemic days.

The company I’m talking about is Zoom Communications (ticker: ZM), a videoconferencing company.

Zoom exploded during COVID as people were staying home to be safe.

To connect with others, either personally or professionally, people used Zoom to meet.

However, as everything went back to normal, people stopped using Zoom, and the stock crashed.

From its peak in 2020, Zoom fell as much as 90% by 2024.

However, Zoom is making a comeback.

On Friday, Zoom stock was up over 12%.

Don’t worry, it isn’t because the next pandemic is on the way. (At least I hope not!)

Zoom released earnings and blew the market away… Wall Street expected Zoom to report around $1.38 for adjusted EPS.

Instead, Zoom reported $1.53 and beat the estimates by more than 10%.

Why the outsized growth in earnings? Simple. Management is doing a great job controlling expenses.

But those are just the financial numbers.

What about operations?

Many don’t realize Zoom is pumping a huge amount of money into artificial intelligence (AI).

What does AI have to do with videoconferencing?

A lot actually.

Zoom released AI Companion last summer and it’s amazing.

AI Companion provides meeting summaries and allows users to ask questions during meetings without disrupting the other participants.

Meeting summaries are a game changer.

It ensures everyone is on the same page.

And it improves productivity.

Now you don’t need dozens of people in a meeting to hear what’s being discussed.

Zoom’s AI Companion can send a summary of the meeting while others are working on separate tasks.

Businesses are really taking notice.

The number of users of AI Companion increased 4x in the 2nd quarter compared to last year.

But Zoom isn’t only focusing on meetings and videoconferencing.

AI Companion also provides virtual agents for businesses to help their customers. Businesses are moving away from call centers and into cheaper, AI-driven virtual agents.

The market for AI agents is expected to explode, growing to $50 billion by 2030.

Zoom won’t get back to $600 per share.

But we don’t need it to.

Zoom is using AI to do more than just simple videoconferencing.

And the pivot to AI is finally paying off for Zoom. This might be a great opportunity to look at a stock that’s down 90% from it’s peak!

Do you own Zoom right now… or are you considering buying it?