Research > ETFs > ETF / ETP Commentary > 

Despite Failed Five9 Deal, Zoom's Future Still Bright

Once-hot Zoom Communications (ZM) is off 24.39% year-to-date with a fair amount of that weakness attributable to a late September decision to walk away from a proposed $14.7 billion all-stock takeover of Five9 (FIVN).Five9 shares plunged in the wake of the offer — an unusual reaction by a targeted firm — prompting investors in that company to vote against the acquisition. Now, some investors might be looking at Zoom as no more than a relic of the early days of the coronavirus, but that could be miscalculation on their parts.“One of the most important changes involved work. Stay-at-home orders forced workers—including key decision-makers—to assess the productivity of remote and hybrid-workforce models,” notes ARK Invest research. “According to Gartner, by the end of this year, the percent of all knowledge workers working remotely will approach 51%, nearly double the 27% in 2019.”Adding to the case for Zoom is that most workers whose jobs allow for it prefer working from home. That could be a positive for Zoom shares going forward and could matriculate down to exchange traded funds with solid allocations to the name. That group includes the ARK Innovation ETF (ARKK ) and the ARK Next Generation Internet ETF (ARKW ).To be precise, ARKK and ARKW are two of the top four ETF holders of Zoom stock, according to ETF Research Center data.What’s interesting about Zoom is that while it felt like it became a ubiquitous brand at the start of the pandemic, the truth is that this is a $74 billion company in a field that’s only now scratching the surface of growth potential. That nascent stage status could be a long-term positive for the stock and the ETFs, like ARKK and ARKW, holding the shares.“Despite this significant shift, Unified Communications (UC) for hybrid and remote-only working models seems to be in the early stages of adoption,” according to ARK. “To service decentralized knowledge workers, enterprises will have to invest in UC platforms to ensure the ubiquity of two-way communication channels. Firm-wide adoption will be critical to communication between and among individuals and teams in different departments and geographic regions in a digital-first age.”Not only is Zoom topping rival offerings such as Microsoft Teams, Google Team, and Cisco Webex with fewer distribution advantages, but there is a long runway for increasing UC spending.“According to Gartner, global cloud-based UC spending today is only $45 billion per year, which, spread across our estimate of approximately 1 billion knowledge workers, amounts to less than $4 per knowledge worker per month,” adds ARK.For more news, information, and strategy, visit the Disruptive Technology Channel.

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.