Data-driven intelligence is something that businesses of all stripes count on to stay competitive. Cloud-based market-intelligence platform ZoomInfo Technologies (NASDAQ:ZI) provides this type of data. And if you’ve been waiting for the ZoomInfo stock price to drift lower so you can buy shares, you got your wish.
Not to toot my own horn, but on July 15 I cautioned that “ZoomInfo stock might fall further as its hype fades,” and that’s precisely what happened. I was trying to warn overzealous traders that ZoomInfo would be yet another example of a post-IPO pop-and-drop.
Usually stocks go up slowly and then fall quickly, but it’s typically the opposite sequence of events with falling IPO stars. This is how the story has unfolded with ZoomInfo stock. That’s disappointing if you got in at the peak of the hype.
Today, however, it’s possible to own a stake in a promising data-insights firm at a more reasonable price point. It’s been said that timing is everything in the markets, and the timing couldn’t be better to start accumulating ZoomInfo shares.
A Closer Look at ZoomInfo Stock
After a relatively quiet period for tech initial public offerings due to the onset of the novel coronavirus, ZoomInfo stock premiered on the Nasdaq exchange with a splash on June 3.
I say, “with a splash,” because the buildup of anticipation surrounding the IPO induced a share-price explosion. The ZoomInfo stock price started at $21, but by the end of its first day on the Nasdaq, the shares were trading at $34, representing a eye-popping 62% single-session gain.
Thus, the first tech IPO of the Covid-19 era was a resounding success, at least in the beginning. On June 10, shareholders were celebrating as the stock reached its peak price of $64.40.
But then came the slow unwinding of the initial hype phase. By midday on Aug. 25, ZoomInfo stock was worth just $36 and change. Therefore, only the earliest stakeholders are still in the green at this point.
Lower Price, Same Value
Should the deflated price of ZoomInfo stock deter prospective investors, then? Value seekers shouldn’t be discouraged as the share price has changed but the company’s value proposition has not.
Just take a moment to consider what ZoomInfo does. Using artificial intelligence and cloud-storage methodologies, the company quickly processes massive amounts of data so that businesses’ sales and marketing teams can improve their customer outreach efforts.
ZoomInfo reportedly has over 15,000 customers spanning multiple industries. Furthermore, the company estimates that it’s pursuing a market opportunity valued at $24 billion.
Oddly enough, one of ZoomInfo’s most important customers is a company that sometimes gets confused for ZoomInfo. I’m referring, of course, to Zoom Video (NASDAQ:ZM).
“ZoomInfo has become an essential tool for Zoom Video’s sales representatives to penetrate new and international markets, and today 90% of the Zoom Video sales team uses the ZoomInfo platform,” explains ZoomInfo.
Results vs. Expectations
On Aug. 11, after ZoomInfo released its second-quarter earnings data, the shares shed 10%. Perhaps the market was expecting better results, but an objective look at the data suggests that ZoomInfo is doing just fine.
For the second quarter, ZoomInfo’s revenues totaled $110.9 million, representing an increase of 62%. Moreover, this outcome exceeded Wall Street analysts’ consensus estimate of $105.6 million.
Additionally, in terms of quarterly adjusted net income, ZoomInfo posted an impressive $27 million. This result translates to seven cents per share and beats the analyst community’s forecast of five cents per share.
If traders were disappointed with ZoomInfo’s second-quarter stats, that’s not necessarily a major concern. It’s best to simply focus on the data itself, which doesn’t appear to be problematic at all.
The Bottom Line
A statement from ZoomInfo CEO Henry Schuck sums up the bright outlook for his company: “We have an extraordinary opportunity ahead of us, as the need for strategic intelligence has never been greater.”
If you concur with Schuck’s assessment of the cloud-based data-insights market, give ZoomInfo stock a chance. At a reduced price now, the shares offer a prime entry point with strong growth prospects.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.