Zoom Video (NASDAQ:ZM) stock bounced higher after earnings beat estimates. It may have taken the rest of the tech sector with it.

Zoom said it earned nearly $114 million and made 37 cents per share on revenue of $1.07 billion for the quarter ending in April, the first of its 2023 fiscal year. It projects revenue of $4.54 billion for the full year.

This was enough to send shares bouncing off their low of below $90/share to $107.45 as trading closed on May 31. At that price the market cap is $32 billion, and the price to earnings ratio is 26. Other work-from-home tech stocks rose in sympathy.

The Fall of ZM Stock

At the height of the pandemic in October 2020, Zoom Video sold for almost $590. With oil prices in the dumper as people stayed home, the company was briefly worth more than Exxon Mobil (NYSE:XOM). Exxon Mobil is now worth over $400 billion.

The fall of Zoom stock is hard to find in Zoom’s financial results, which have been excellent. Revenue has gone from a pre-pandemic $623 million to last year’s $4.1 billion. At its height, roughly 30% of the money was reported as net income.

But growth did slow. Zoom booked $882 million in revenue for its last quarter of fiscal 2021. It booked $1.07 billion for the last quarter of 2022. Once people saw how high the sky was, the stock fell from it. Two weeks before the latest earnings release came out, Piper Sandlin analyst James Fish finally pulled back his bullish call. Turned out he called the bottom.

The Rise of Zoom

Zoom didn’t invent videoconferencing. It just made it popular with simple, web-based software and a price that started at free. As a result, people rushed to it when the pandemic hit. The word Zoom became a verb.

At the time of the pandemic, Cisco Systems (NASDAQ:CSCO) — where Zoom founder Eric Yuan had previously worked — had been trying to make money in videoconferencing for 15 years. Cloud Czars like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) have also integrated video calls into their tools. A tiny camera has been a fixture over PC screens for a decade.

Zoom’s rise against these giants came from a “freemium”  business model, offering free basic services and add-ons via subscriptions. Conferences that combine audio, video and chat are also easy to set up since it’s all in the cloud. The company also sells ads and hardware and invests in startups.

Its one big deal, however, died. This was an effort last July to buy Five9 (NASDAQ:FIVN), a call center software company, for $14.7 billion in stock. Five9 how has a market cap below $7 billion. Instead, Zoom is buying Solvvy, a customer support company. Solvvy will be integrated into Zoom’s Contact Center. This time the price was not disclosed.

The Bottom Line on ZM Stock

Analysts loved Zoom Video stock at its height. At its low, just nine of 23 at Tipranks are telling clients to buy it. Even their highest price target is less than half the all-time high.

Whether Zoom has bottomed out depends on whether CEO Yuan can keep finding bargains like Solvvy that increase Zoom’s revenue opportunities. It must also stay on top of security problems that could deliver bad headlines.

At seven times revenue, Zoom is still being priced like a growth stock, yet it only grew 12% year-over-year in its latest quarter. To earn even its current valuation, it must continue to grow on both the top and bottom lines. So far, Zoom Video bulls are just nibbling on it, suggesting investors use options to limit their risk.

Caution seems wise. Zoom is not going back to the moon.

On the date of publication, Dana Blankenhorn held long positions in GOOGL and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.