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4. Zoom Video Communications, Inc. (NASDAQ:ZM)

Number of Hedge Fund Holders: 43

Shares of Zoom Video Communications, Inc. (NASDAQ:ZM) dropped nearly four percent this morning after Citi downgraded the communications technology company from “Neutral” to “Sell.”

Citi analyst Tyler Radke thinks increasing competition and macroeconomic hurdles would impact the growth of Zoom Video Communications, Inc. (NASDAQ:ZM). He also cut his price target for Zoom stock from $99 per share to $91 per share.

Separately, Zoom Video Communications, Inc. (NASDAQ:ZM) appeared in the first-quarter 2022 investor letter of investment management firm Horos Asset Management. Here’s what the firm said:

“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago (see here) is Zoom Video Communications (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed nearly 80%.

Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”