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Zoom may permanently alter business travel

Zoom's share price was up 40% last week.

ZM shares peaked at an all time high last week

Work-from-home protocols, tele-commuting, webinars and virtual meetings may permanently alter business travel, which accounts for a significant portion of aviation revenues. Zoom isn't the only winner here. Given the restrictions on daily commuting, technology has become an enabler of businesses and lifestyles. Many tech-related stocks ranging from cloud computing, e-commerce to data security have benefited greatly as a result of this migration to the digital realm.

Early investors in Zoom and other tech stocks were lucky. But one might wonder if it still makes sense to even buy its shares. At its peak, Zoom traded at more than 2,000 price-to-earnings, implying a dividend yield of 0.05%.

“Our ability to keep people around the world connected, coupled with our strong execution, led to revenue growth of 355% year-over-year" - quote from Zoom's recent earnings call

Clearly investors are not buying technology stocks for their dividends.

Everyone who has a positive rating on the sector is valuing it based off the scenario that we won't be returning to our offices soon. Not at least within the next 12 months.

A few months ago, people had already been speculating about a second wave. This has since emerged in several major cities - South Korea, Hong Kong and Japan. The effect of the virus is also festering down south in Australia where it is currently winter. Governments are holding their breath in anticipation of a third wave towards the year end.

For now, it doesn't look like the nightmare of travel bans and city lockdowns are easing anytime soon. This virus could linger around for a few years and you could be using Zoom for a longer time than you think.

Right place at the right time

Using Zoom underscores the innate desire to engage in a face-to-face setting. Apple has tried to do this with FaceTime in the peer-to-peer context. Skype has video calls. Polycom even offers an immersive platform which is targeted at large corporates with the budget to invest in virtual-presence-type meetings. Doing so allows their professionals based in multiple cities to communicate in real-time without the need to fly to a single location.

While these paid-for-service features have not been cheap, corporates weigh the trade-off between the cost of a business class air ticket vis-a-vis the cost of an enterprise-grade platform.

Video conferencing is not state-of-the-art tech. But Zoom was caught in the right place at the right time. In a world without safe distancing and masks, demand for real-time video communications and webinar broadcasts might never have evolved into the defacto standard today.