Zoom Communications (ZM) has offered $18 million to the U.S. Securities and Exchange Commission (SEC) to resolve a four-year-long investigation into its privacy practices and communications. According to the Bloomberg report, the settlement still needs approval from the SEC.
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The investigation, which began in 2020, focused on Zoom’s user privacy policies, encryption methods, and user metric calculations. The scrutiny further intensified when Zoom’s videoconferencing platform became widely used during the COVID-19 pandemic. In addition to the SEC probe, Zoom was also investigated by two U.S. attorneys over its interactions with foreign governments.
Zoom’s Enhanced Security Measures Help Mitigate Legal Risks
To address security concerns and comply with regulatory requirements, Zoom has implemented various measures to enhance its security practices. These efforts include enhancing encryption protocols to better protect user data and introducing tools to identify and mitigate potential threats.
Investors should note that Zoom’s exposure to legal risks compares favorably with that industry’s average. According to the TipRanks’ Risk Analysis tool, ZM’s legal and regulatory risks account for 16.4% of its total risks, which is below 20.3% for the industry.
Is ZM Stock a Good Buy Now?
Turning to Wall Street, ZM has a Hold consensus rating based on six Buys, 15 Holds, and one Sell assigned in the last three months. At $77.47, the average Zoom price target implies a 9.24% downside potential. Shares of the company have gained about 19% year-to-date.
