Video-conferencing company Zoom just had its best trading day in 8 months, as coronavirus fears mean that more people work from home (ZM)

eric yuan zoom ceo

Shares of Zoom, the red-hot video chat app that made for one of 2019's hottest IPOs, soared over 15 percent on Monday.
The spread of Coronavirus in China and abroad is leading to an uptick in remote work — which may have translated into more business for Zoom.
CEO Eric Yuan said in an interview with CNBC that the app is seeing "peak usage" amid the coronavirus crisis, with more employees working from home to help stem the spread of the disease.
However, that's not all: A Microsoft Teams outage may have made Zoom look better by comparison, while an analyst says that a competitive move from RingCentral might have attracted short sellers. The company also announced that it would share its quarterly earnings on March 4th.
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Shares of video conferencing company Zoom soared on Monday, with the stock ending the trading day up almost 15 percent, making for the company's best trading day in almost 8 months.

Experts attribute this to a confluence of factors.

The competing Microsoft Teams experienced an outage earlier in the day, making Zoom look better by comparison. RingCentral, which makes voice calling software for businesses, announced a partnership with Avaya to add video chat to its own product — which at least one analyst guesses may be sufficient cause for some on Wall Street to short shares Zoom and go long on RingCentral. Plus, Zoom is now set to share its quarterly earnings report on March 4th.

But, perhaps most surprising of all is that Zoom appears to be benefiting from fears around the novel coronavirus outbreak in China and abroad. Zoom CEO Eric Yuan said in an interview on CNBC on Monday that the company is seeing interest in its service spike, as companies look for ways to help workers do their jobs safely from home.

"I had to shut down my phone actually, because everyone is calling us, given the coronavirus and those who cannot travel, you need to have very reliable, secure tools like Zoom. Our usage is very, very high since last month, last week, almost everyday there's record usage," Yuan said on CNBC.

Zoom did not immediately respond to a request for comment.

Coronavirus concerns

Several analysts speculated that worries about the coronavirus was a big reason investors gravitated towards the stock.

Several American companies with operations or a presence in China have banned or limited employee travel to China amid the outbreak, including tech companies like Google, Apple and Amazon. Zoom's video conferencing tools make remote work a possibility and offer a viable alternative to an in-person business visit.

"Remote video is attractive when you start to see countries closing travel, but business must go on," Dan Newman at Futurum Research told Business Insider. "Zoom has a real appeal because it is one of the simplest applications on the market for doing video conferencing."

Indeed, Eric Jackson, founder at EMJ Capital, told Business Insider that he's seen data showing a massive increase in downloads of Zoom app yesterday in China, where the Coronavirus outbreak is at its most serious. It was about 25,000, compared to 3,000 to 5,000 on average over the last few months, he said.

However, this could prove to be a double-edged sword for Zoom: Alex Zukin of RBC Capital Markets notes that Zoom itself does have a sizable workforce in China, which could make investors worry that the company's ability to do business may be impacted amid the coronavirus epidemic.

But that's not all

Competitive factors could also play a role: That Microsoft Teams outage on Monday, while short-lived, could have given customers and Wall Street alike a reason to look at Zoom.

Additionally, RingCentral and Avaya announced a new videoconferencing tool called Avaya Cloud Office on Monday that could be a competitor to Zoom.

Analyst James Fish of Piper Sandler & Co. writes in a research note: "we do view this as a competitive issue for Zoom...We have been getting an increasing amount of questions around the coming release of RingCentral video related to Zoom."

Zukin said investors may be fearful of the competitive product from RingCentral and therefore shorting Zoom and going long RingCentral.

In general, Zoom has been performing well. Its shares have soared over 144 percent after its initial public offering last April. Remote work is an increasingly necessary option for companies and will just continue to grow, Zukin said — whether or not it benefits from any global health crises in the future.

"The remote work trend is getting bigger, and Zoom continues to be the best in class vendor...it's one that in a time of elevated remote work sentiment, its not surprising that that's the one people talk about," Zukin said.

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