Recent announcements that Pfizer (NYSE:PFE) and Moderna‘s (NASDAQ:MRNA) Covid-19 vaccines are showing mind-blowing 90% or greater efficacy in Phase-3 trials is great news for everyone — except for work-from-home stocks like Zoom (NASDAQ:ZM) stock.
The idea is that Zoom usage — and by extension, ZM stock — surged as the Covid-19 pandemic kept workers out of offices. Widespread distribution of highly effective vaccines in 2021 will reverse that trend. Workers will go back to the office. Zoom usage will taper off. ZM stock will drop.
That’s the thinking behind Zoom stock’s recent 25% selloff as it has become clearer and clearer that we are indeed in the final chapters of the Covid-19 nightmare.
But this rudimentary analysis misses the bigger picture.
And in that bigger picture, this recent selloff in ZM stock is unnecessarily short-sighted — which, of course, makes it a great buying opportunity for long-term investors.
The Permanent Changes of Covid-19
The Covid-19 pandemic is ephemeral. It will pass. Eventually. Probably soon. And the world can and will get back to “normal.”
But it will be a new “normal,” because during the pandemic, consumers and businesses both learned that there is a whole world of underutilized virtual tools out there that can streamline, accelerate and optimize physical processes — and ultimately make their lives way easier.
Why go to the movies? Netflix (NASDAQ:NFLX) has great shows, and it’s much cheaper.
Why go to the mall? Between Amazon (NASDAQ:AMZN), Wayfair (NYSE:W), Farfetch (NASDAQ:FTCH) and Chewy (NASDAQ:CHWY), I can get everything I want from the comfort of my own home — and I don’t have to waste money on gas or parking.
And, yes, why go back to the office? Between Zoom, Slack (NYSE:WORK), Dropbox (NYSE:DBX), Atlassian (NASDAQ:TEAM) and Asana (NASDAQ:ASAN), I can be just as productive at home as I am in the office — and I can save the company a bunch of money because they won’t have to pay for huge office spaces anymore (which could lead to a raise).
Of course, that doesn’t mean consumers won’t ever go to the movies, or the mall or the office again. They will. But most will do all three less often than before, implying that the “new normal” we return to in 2021 will be a hybrid world with a much heaver mix of of digital products and services than the world in 2019.
To that end, Zoom — and by extension, ZM stock — has long-term staying power.
Zoom Is Here to Stay
Covid-19 may have thrust Zoom into the spotlight. But long after the pandemic passes, Zoom will remain a mission-critical tool for most enterprises.
Because Zoom’s advantages extend far beyond being able to have conferences and meetings when the office is closed.
Zoom instantaneously allows businesses and people from all over the world to have virtual meetings. No flights. No long trips. In this sense, Zoom is a cost-saving and time-saving tool for businesses and their employees.
Zoom also enables employees to set up meetings whenever they want, without having to worry about overlapping schedules and/or without having to wait for a conference room to open up. In this sense, Zoom optimizes workflow efficiency.
Zoom also unifies corporate communications, allows for quick easy check-ups, and gives employees the work flexibility they’ve long desired.
It’s a tool which provides multiple benefits. Those benefits are sticky and value-additive. Both in a world ravaged by a pandemic. And in a world free of a pandemic.
Zoom is here to stay. Even after the pandemic passes, Zoom usage and adoption will only increase dramatically over the next decade. As that happens, ZM stock will power higher.
Bottom Line on ZM Stock
Covid-19 or not. Zoom is a great platform which adds tremendous value to businesses of all shapes and sizes.
Thus, when I see ZM stock dropping big on the heels of favorable Covid-19 vaccine news, I smell a buying opportunity. Near-term weakness will eventually and inevitably turn into long-term strength.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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