Zoom’s market cap is larger than the combined worth of world’s seven largest airlines

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Video communications firm wins race for work-from-home market

Zoom

Zoom Video Communications (ZM) has capitalised on the worldwide shift to virtual working and now has a market cap larger than the world’s seven largest airlines put together. In December 2019, the company had 10 million daily meeting participants, by April 2020 this figure had surged to 300 million people in the workforce, including the British cabinet.

According to the International Labour Organisation (ILO), 81 per cent of the global workforce of over 3 billion people have had their working life affected in some way or another by the Covid-19 crisis. While for some this means unemployment, for many in developed economies their jobs have shifted online as they work from home and offices remain shuttered.

The service has proved popular not only as a solution to facilitate working from home, but also learning from home. More than 90,000 schools in 20 countries are thought to be using the technology.

Many have been surprised that Zoom, which was only launched in 2013, has managed to leapfrog more established names in the video communication sector, such as Skype or Google, which has its Hangouts video calling function.

Keen to make up for an overlooked opportunity, investors have flocked to the company. Zoom stock has gained 157 per cent in the year to date, while the net worth of its Chinese-American founder Eric Yuan has surged to just under $8bn (£6.4bn, €7.28bn).

The seismic effect of the novel coronavirus outbreak on the global economy and workforce has been laid bare by the visualcapitalist, a website that highlighted the fact that Zoom Video Communications’ market capitalisation is now more than the combined worth of the seven largest airlines in the world.

With nations around the world closing their borders and governments limiting internal, let alone international travel, the air travel sector has suffered significantly. Since the end of January, the combined revenues of these leading carriers have fallen by 62 per cent. By mid-May their combined market capitalisation equated to just over $46.2bn.

The longevity of this disparity is certainly debatable, as are Zoom’s chances for further growth. The company has endured a number of security failings, in part as a result of its rapid scale-up. Last month, it was revealed that hackers were giving away the accounts and information of 500,000 users for free on the dark web.

While some have argued that the easing of the lockdowns across the world will bring Zoom back down to earth somewhat, others have highlighted the growing calls for a change in work culture. Indeed, Twitter (TWIT) CEO Jack Dorsey has recently said that his employees could work from home “forever”, even after the pandemic has ended.

There is similar consternation as to the long-term attractiveness of airline stocks. Although revenues will surely rebound as travel picks up again, there is some concern that the crisis will have a long term effect on the viability of many major carriers. Such worried investor sentiment was flamed yet further in recent weeks when the oft-copied billionaire Warren Buffett revealed he had sold all of his airline stakes.

 

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