The Lesson From Zoom
During the pandemic, many tech stocks took off for the clouds. Perhaps no stock was more emblematic of the buying fervor than Zoom (NSDQ: ZM). The stock began 2020 at about $68 a share. By October it had reached a high of around $588. That’s nearly a nine-fold increase!
The stock has since fallen back under $300. But from under $70 a year at the beginning of last year, it’s still been quite a run.
As COVID-19 forced people to stay home, “Zoom” became a household word. The appeal of the program is that it’s easy to use and the quality and smoothness of the connection are quite impressive. If you have a smartphone, all you need is a link and passcode for the meeting you’ve been invited to. If you want to use your desktop computer instead of a phone, you will need to have a webcam connected, but even that is not difficult to set up.
From Periphery to Center Stage
It’s unclear how many people had even heard of Zoom before the pandemic, but nowadays many people use it every day. Especially for people who work from home and have to attend meetings, Zoom has become a necessity.
And it’s not only for work meetings, Zoom has been used as a substitute for all kinds of physical gatherings: friendly virtual social gatherings, school lessons, church meetings, even weddings. Any type of event you can think of, it’s probably already been held on Zoom.
If you only use Zoom for personal purposes, you probably used it for free. And if you had to attend a Zoom work meeting, it was likely free for you as well. And unlike most free apps, you didn’t have to deal with annoying ads. So, have you wondered, how the heck does the company make money?
The answer lies in different tiers of service. A Zoom meeting is free for up to 40 minutes and 100 participants. For organizations that need greater capacity, they’ll have to pay for licenses that range from $150 to $300 a year. Besides the subscription plans for Zoom meetings, Zoom also offers other paid services that allow customers to collaborate seamlessly, in some ways more cost-effectively and efficiently than they could in person.
For the year 2020, Zoom’s revenue more than quadrupled to $2.6 billion. The company ended the year with over 167,000 customers who had at least 10 employees. Among those customers, more than 1,600 customers paid at least $100,000 over the previous 12 months. Earnings per share went from a measly $0.09 the year before to $2.25. Obviously, COVID was a huge boon for Zoom.
As Zoom proves, major events can dramatically alter a company’s fortunes. COVID changed the way people interact, and Zoom stepped in to meet the new demand created by the pandemic. Even when COVID is finally defeated, Zoom is likely here to stay. Customers have a had a taste of what Zoom can offer, and even though they may not need Zoom anymore, they will still keep using it after the pandemic because of the advantages it offers.
And it’s not just video conferencing and group collaborations. The change in social behavior necessitated by COVID also caused a surge in another type of activity: telemedicine. Consultations with medical professionals also took to the Internet. Telemedicine, providing care to patients remotely, also took off. Rather than visiting doctors and hospitals at a time when you are trying to avoid a contagious disease, many patients liked the idea of speaking with their doctors over the telephone or via video (e.g. Zoom).
Humans are creatures of habit, and sometimes it takes a big external influence to change behavior. As Steve Jobs once said, customers don’t know what they want until they’ve been shown what they could have.
This dynamic perfectly explains the rise of telemedicine. When it comes to remote medical consultations, new technology is showing people what’s possible.
During the pandemic, quarantined consumers got accustomed to telemedicine, more than ever before, because of lockdowns and social distancing. As COVID restrictions ease, this development will accelerate.
After months of painstaking research, we’ve unearthed the best plays on telemedicine, but many investors have never heard of them. The time to invest in these little-known companies is now, before the herd catches on and bids up their shares. For details, click here.