Shares of Zoom cratered 14.7% yesterday, after presentation of the third-quarter earnings card. Zoom, spoiled with accelerating revenue growth rates during the pandemic, is now looking at a material deceleration of growth… and it already has an impact on Zoom's perception as a growth stock. Revenues in the third-quarter were $1.05B, showing a revenue growth rate of only 35% year over year. Since the second-quarter, however, sales growth has been slowing down. Revenue growth in the second-quarter, year over year, was 54%. In the second-quarter, Zoom's communications platform generated more than $1.0B in revenues for the first time in the firm's history. Because of the pandemic, Zoom's revenues doubled between Q1'20 and Q2'20… and the business experienced strengthening demand for its video conferencing services in the quarters that followed. The rise in remote working accelerated the digital transformation trend and Zoom played a key role for a lot of companies to communicate with their employees. The video chat company experienced an unprecedented revenue surge last year because businesses shut their doors and employees were forced to work from homes. Zoom benefited from the COVID-19 pandemic like few companies did. Zoom's third-quarter showed that the threat of a revenue slowdown is real and shares of Zoom are still overvalued! A new normal: Slower revenue growth Zoom Video Communications ( NASDAQ: ZM) is at risk of generating negative returns for shareholders as a period of pandemic gains is coming to an end.
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