What Happened?
Shares of sales intelligence platform ZoomInfo fell 13.4% in the afternoon session after China imposed a 34% tariff on all U.S. imports amid escalating trade war tensions. This was partly in response to the "reciprocal tariffs" announced by the Trump administration the previous day, with levies on Chinese goods estimated to be as high as 50%. The move was the first in a list of anticipated retaliatory measures that could have had investors really worried. The tariffs were also widely seen as a significant threat to global trade flows, with the potential to slow economic growth and drive up consumer prices.
The shares closed the day at $7.53, down 14.3% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy ZoomInfo? Access our full analysis report here, it’s free.
What The Market Is Telling Us
ZoomInfo’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for ZoomInfo and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 25.9% on the news that the company reported weak first quarter 2024 results. Revenue guidance missed analysts' expectations, and customer numbers are declining. Notably, the company lowered full-year guidance for revenue, adjusted operating income, and free cash flow, which is never a good sign. The company noted that small business customers were more challenged in Q1. Overall, this was a tough quarter for ZoomInfo.
Following the results, Wall Street analysts downgraded the company's rating. Goldman Sachs downgraded the stock's rating from Neutral to Sell and lowered the price target from $19 to $12. Similarly, Piper Sandler lowered the stock's rating from Overweight to Neutral, adding "Our patience has worn thin in waiting for a fundamental recovery at ZI on further erosion across the cohort of SMB and mid-market customers that has been spotty for the past two years but is now showing further signs of another leg down."
ZoomInfo is down 28.1% since the beginning of the year, and at $7.52 per share, it is trading 54.8% below its 52-week high of $16.62 from May 2024. Investors who bought $1,000 worth of ZoomInfo’s shares at the IPO in June 2020 would now be looking at an investment worth $221.18.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. We prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
