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Should You Buy the Dip in Zendesk?

Published 11/03/2021, 09:48 AM
Updated 11/03/2021, 10:31 AM
© Reuters.  Should You Buy the Dip in Zendesk?
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Customer service software company Zendesk Inc . (NYSE:ZEN) has been making efforts to expand its operations. However, investor skepticism over its $4 billion stock deal to takeover Momentive Global—and an ongoing investigation connected to the merger—are obscuring the company's growth prospects. In addition, given the company’s poor profitability and lofty valuations, there is a question as to whether the stock will be able to rebound from its recent price decline? Read ahead to learn more.San Francisco-based software development company Zendesk Inc. (ZEN) offers software-as-a-service (SaaS) to companies in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. Its products enable billions of conversations, connecting more than 100,000 brands with hundreds of millions of customers via phone, chat, email, messaging, social media, communities, review sites, and help centers. The company is pursuing various strategies to grow by 2023 and accelerate its revenue to $3.5 billion in 2024.

However, its stock has declined 29.5% in price year-to-date and 13.6% over the past month. Moreover, closing the last trading session at $104.8, the stock is currently trading 37.1% below its 52-week high of $166.6, which it hit on February 5, 2021.

In addition, an ongoing evaluation related to ZEN’s merger with Momentive Global Inc. could raise investor anxiety surrounding the stock. Given the stock’s steep valuation and poor profitability, its near-term prospects look uncertain.

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