Zoom shares crash as security + privacy concerns grow
The video conferencing app Zoom has become suddenly ubiquitous over the past few weeks, as the coronavirus shutdown closes schools, businesses, and keeps us all indoors. Shares of Zoom dropped 9% on Monday, adding to their sharp declines in recent days, as security and privacy vulnerabilities are reported. There is also new competition from other established video conferencing apps, who have access to more capital than Zoom. Skype, owned by Microsoft, is but one.
The stock had surged to a record high in early March, but after critical reports last week revealed the company's sketchy data privacy practices, investors are spooked. Now, more than a third of the company's market value has now been erased from its record high.
From Reuters:
Brokerage Credit Suisse downgraded Zoom Video Communications Inc's stock to "underperform" from "neutral". Analysts, on average, rate the stock "hold," according to Refinitiv data. "While implied new customer growth may seem undemanding compared to recently disclosed 20x participant growth, we expect much of the recent surge will prove ephemeral, and/or comes from free users or education, which are very difficult to monetize," Credit Suisse analysts wrote in a note.
Last week, at least two U.S. state attorneys had sought information from Zoom following multiple reports that questioned its privacy and security. Some school districts in the U.S. have started to ban the app for online learning from home because of growing security concerns, while the New York City Department of Education said teachers should instead work through Microsoft Teams, Washington Post reported on Saturday.
Reuters reported last week that Elon Musk's rocket company SpaceX its employees from using Zoom, citing "significant privacy and security concerns."
Read more at Reuters: