Untact Leading Stock 'Zoom' Surpasses Even IBM in Market Capitalization

[Asia Economy Reporter Naju-seok] Zoom, which has emerged as a representative player in the untact (contactless) era, surpassed IBM, a leading technology stock, in market capitalization thanks to a surge in its stock price. Following the rally in the New York stock market, signs of recovery are appearing in the US manufacturing sector. Despite the COVID-19 crisis, signals such as increased new orders and reduced inventory are emerging.

원본보기 아이콘

According to the Wall Street Journal (WSJ) and others on the 1st (local time), the market capitalization of the video conferencing company 'Zoom Video Communications' reached $129 billion (approximately 153 trillion won) that day, surpassing IBM, a representative US technology stock, which had a market capitalization of $109.9 billion. Zoom's market capitalization surged because its second-quarter revenue was $653.5 million, more than four times the $185.7 million revenue in the same period last year. The stock price also rose 40% from the previous day's closing price of $325.1 to $457.69. Zoom's video conferencing technology has been utilized not only by companies but also by schools and government agencies as remote work increased after COVID-19, and its earnings outlook remains bright.

The stock market's strength appears to be affecting manufacturing as well. According to the Institute for Supply Management (ISM), the manufacturing Purchasing Managers' Index (PMI) last month was 56.0, the highest since November 2018. This figure is also higher than the Bloomberg survey forecast of 54.8 by economic experts. The PMI is based on a survey of purchasing managers at companies; a reading above 50 indicates economic expansion, while below 50 indicates contraction.

The encouraging part is that new orders recorded 67.6, the highest since January 2004. This can be interpreted as reflecting optimism about the economic outlook. Additionally, the production index rose from 62.1 to 63.3, and the inventory index was 44.4, the lowest since January 2014. As orders increased, inventory rapidly disappeared.

However, the employment index remained sluggish at 44.4.

Timothy Fiore, chairman of ISM, analyzed, "The August indicators improved compared to July," and added, "There is a recovery trend from the low point caused by COVID-19." He predicted that this recovery trend would continue next month as well.

Supported by improvements in employment indicators, the Dow Jones Industrial Average rose 0.76% (215.61 points) to 28,645.66, the S&P 500 index increased 0.75% (26.34 points) to 3,526.65, and the Nasdaq index jumped 1.39% (164.21 points) to 11,939.67. The stock prices started the day weak but turned upward after the manufacturing PMI announcement.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.