As the Covid-19 outbreak impacts companies around the world, video communication platform Zoom has seen its share prices rise. However, investors may also be backing the wrong company.
Over the weekend, it was reported that the number of coronavirus cases in the US has increased, with reports on both the east and west coasts, as well as states in between.
As it currently stands today (2 March), there are reported cases in Massachusetts, Wisconsin, Illinois, Washington, Oregon, California and Arizona. In Europe, the number of confirmed cases has also risen. The first diagnosis of coronavirus in the Republic of Ireland was confirmed over the weekend, and a secondary school in Dublin was closed to mitigate the spread.
As a result, many workers across Europe and the US are now following the example of those in Asia, where the virus originated, replacing trade conferences with video presentations, and business meetings with conference calls.
Surge in Zoom stocks
While the disruption to business might be having a positive impact on global carbon dioxide emissions, with a reduction in travel and industry activity, the spread of coronavirus is having a negative impact on some major economies. Few companies are seeing an opportunity for growth in this situation, but Zoom is one of them.
Zoom, which is a San Jose-based video communications platform, enables users to video chat, hold online meetings and collaborate from a distance. On Thursday (27 February), Bloomberg reporter Nathan Crooks wrote that Zoom’s shares rose by around 11pc over the last week, as companies around the world cut back on travel and face-to-face meetings.
However, Crooks also suggested that investors may have inadvertently been backing the wrong company, instead investing in Chinese mobile phone components maker Zoom Technologies, which has the ticker ZOOM on the stock exchange. Californian video communications company Zoom, meanwhile, is represented by the ticker ZM.
Crooks wrote that the Beijing-headquartered company, which has a market value of just $18m, has seen shares double over the last week. He added: “It’s not the first time the wrong Zoom has surged, with Zoom Technologies shares soaring after Zoom Video’s IPO last year.”
Zoom’s response to Covid-19
California company Zoom, which is led by founder and CEO Eric Yuan, shared a blogpost last week emphasising its commitment to user support and business continuity as the Covid-19 outbreak spreads.
“Here at Zoom, we are closely monitoring the coronavirus public health emergency that has affected thousands of people across China, South Korea, Japan, Italy and numerous other countries,” Yuan wrote.
“We have been in constant touch with our employees in regions impacted by the epidemic, as well as our customers in those areas, and we’re providing support in every way we can.
“It’s my responsibility as Zoom’s CEO – and Zoom’s unique responsibility as a company – to do everything in our power to support those impacted by the coronavirus outbreak by committing our reliable technology, expanded access and agile customer service.”
Resources in the affected areas
Yuan added that in China, Zoom has lifted the 40-minute limit on meetings with more than two participants, enabling workers to remain in meetings for as long as they need to without having to upgrade to a premium account.
“We’re proactively monitoring servers to ensure maximum reliability amid any capacity increases, as uptime is paramount,” he wrote.
“We’re scheduling informational sessions and on-demand resources so anyone can learn how to use the Zoom platform with ease – and at their convenience.”
Yuan said that the platform has been used to provide free services and technical support to NGOs in affected regions. The platform has been used to train “thousands of mental health counsellors and prepare them for the psychological consultations with doctors, patients and their families in Wuhan”.
According to Zoom, there were 58 training sessions held for 312,056 participants from 29 January to 25 February, with a total training duration of 84.6 hours. Additionally, the company is offering its platform to universities and colleges in China, so that they can continue their teaching activities online.
“We’re proud that the flexibility and ease of use of the Zoom platform makes these interactions possible for every user,” Yuan wrote.