Zoom Video (ZM) has announced that it is suspending free individual user registrations in mainland China. The Nikkei Asian Review reports that the decision was made to meet Chinese regulatory requirements, especially as US-China trade tensions intensify.
However, it will still be possible for free users to join meetings hosted by registered enterprise customers.
“The China exposure has become a bit of a concern from a media perspective, especially after reports that some data was routed through a server in China,” DA Davidson analyst Rishi Jaluria said, reports Reuters.
Despite ZM quickly becoming a household name, its 155% YTD surge has left most analysts sidelined on the stock. Citigroup analyst Walter Pritchard has just initiated coverage of ZM with a Hold rating and $186 price target (7% upside potential).
Pritchard comments: “We see a lot priced into the stock already, implying a 50% revenue CAGR through FY27. We fear we may see a balance of re-open sentiment that could challenge some of the recent excitement around the stock, which trades at a meaningful premium.”
Meanwhile Oppenheimer’s Ittai Kidron writes: “We remain Perform-rated, seeing a balanced risk/reward trade-off (high valuation/unresolved issues vs. strong user growth and traction).”
Overall the stock shows a cautiously optimistic Moderate Buy consensus. This breaks down into 8 buy ratings, 14 hold ratings and 2 sell ratings in the last three months. Notably the average analyst price target of $124 now suggests downside potential of 28% lies ahead. (See Zoom stock analysis on TipRanks).
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