Amid the COVID-19 pandemic, many people have transitioned to working—and socializing—from home. If these trends become the new normal, certain companies may be in for a big payoff.
Popular video conferencing company, Zoom Communications, is a prime example of an organization benefiting from this transition. Today’s graphic, inspired by Lennart Dobravsky at Lufthansa Innovation Hub, is a dramatic look at how much Zoom’s valuation has shot up during this unusual period in history.
The Zoom Boom, in Perspective
As of May 15, 2020, Zoom’s market capitalization has skyrocketed to $48.8 billion, despite posting revenues of only $623 million over the past year.
What separates Zoom from its competition, and what’s led to the app’s massive surge in mainstream business culture?
Industry analysts say that business users have been drawn to the app because of its easy-to-use interface and user experience, as well as the ability to support up to 100 participants at a time. The app has also blown up among educators for use in online learning, after CEO Eric Yuan took extra steps to ensure K-12 schools could use the platform for free.
Zoom meeting participants have skyrocketed in past months, going from 10 million in December 2019 to a whopping 300 million as of April 2020.
The Airline Decline
The airline industry has been on the opposite end of fortune, suffering an unprecedented plummet in demand as international restrictions have shuttered airports:
The world’s top airlines by revenue have fallen in total value by 62% since the end of January:
| Airline | Market Cap Jan 31, 2020 | Market Cap May 15, 2020 |
|---|---|---|
| Southwest Airlines | $28.440B | $14.04B |
| Delta | $35.680B | $12.30B |
| United | $18.790B | $5.867B |
| International Airlines Group | $14.760B | $4.111B |
| Lufthansa | $7.460B | $3.873B |
| American | $11.490B | $3.886B |
| Air France | $4.681B | $2.137B |
| Total Market Cap | $121.301B | $46.214B |
Source: YCharts. All market capitalizations listed as of May 15, 2020.
With countries scrambling to contain the spread of COVID-19, many airlines have cut travel capacity, laid off workers, and chopped executive pay to try and stay afloat.
If and when regular air travel will return remains a major question mark, and even patient investors such as Warren Buffett have pulled out from airline stocks.
| Airline | % Change in Total Returns (Jan 31-May 15, 2020) |
|---|---|
| United | -72.91% |
| International Airlines Group | -72.16% |
| American | -65.76% |
| Delta | -65.39% |
| Air France | -54.34% |
| Southwest Airlines | -56.35% |
| Lufthansa | -48.08% |
Source: YCharts, as of May 15, 2020.
The world has changed for the airlines. The future is much less clear to me about how the business will turn out.
—Warren Buffett
What Does the Future Hold?
Zoom’s recent success is a product of its circumstances, but will it last? That’s a question on the mind of many investors and pundits ahead of the company’s Q1 results to be released in June.
It hasn’t been all smooth-sailing for the company—a spate of “Zoom Bombing” incidents, where uninvited people hijacked meetings, brought the app’s security measures under scrutiny. However, the company remained resilient, swiftly providing support to combat the problem.
Meanwhile, as many parts of the world begin taking measures to restart economic activity, airlines could see a cautious return to the skies—although any such recovery will surely be a “slow, long ascent”.