What Went Wrong With Zoom’s Growth Story — and How Investors Could Still Win

Court: N.D. California

Case: 3:20-cv-02353

Zoom Video ZM has agreed to a settlement with investors who accused its leadership of making misleading statements about the company’s growth, security practices, and user base during its pandemic-era surge.

The agreement aims to close a volatile chapter defined by explosive adoption, overstated metrics, and investor concerns about transparency.

How Leadership Lapses Fueled the Crisis

At the height of the pandemic, Zoom became synonymous with remote work and virtual meetings. Executives assured that the company’s rapid expansion was sustainable, while highlighting bold claims about security upgrades and user growth.

However, it was later revealed that the company overstated its customer base by conflating free and paid accounts, while minimizing concerns over “Zoom-bombing” and data privacy lapses.

Meanwhile, Zoom doubled down on its growth narrative, emphasizing massive adoption numbers that helped fuel its soaring stock price.

Investors Call Out the Storyline

As scrutiny mounted, Zoom’s stock, once a pandemic darling, faced heavy pressure:

Analysts questioned whether Zoom had inflated user metrics, and investigations highlighted flaws in Zoom’s touted “end-to-end encryption” and recurring incidents of security failures that undermined its reputation.

With all of this in the table, investors filed a lawsuit alleging that executives benefited from insider sales at inflated valuations, even as growth was slowing and risks mounted.

A Deal to Compensate Shareholders

Zoom has now agreed to a $150M settlement with investors, and the claiming deadline is September 19, 2025. While the company did not admit wrongdoing, the settlement aims to provide shareholders a direct avenue for recovery.

If you purchased ZM, you may be eligible to submit a claim for compensation. You can check the details and submit yours here.