Morgan Stanley not surprised by layoff as Zoom lagged peers in making such move

Morgan Stanley analyst Meta Marshall notes that on Tuesday, in a company blog post Zoom announced plans to reduce its workforce by about 15% while also reducing executive compensation for 2023 and 2024. Zoom’s 15% layoff is larger than many similar recent announcements within the tech industry and aligns with companies turning focus to profitability preservation heading into a more uncertain macro environment. In general, the firm believes an eventual layoff was expected given Zoom had lagged peers in making such a move. The company was still actively hiring through much of 2023, Morgan Stanley adds. Given heavily negative sentiment on the name, the firm sees this focus on cost discipline as a positive for the name, but remains Equal Weight rated as it remains cautious on growth potential near-term, particularly Q1. Morgan Stanley has a price target of $78 on the shares.