Zoom: Encryption Issues, Security Breaches, and 20% Stock Drop — Can It Recover?

Court: N.D. California

Case: 3:20-cv-02353

If you’ve been following Zoom since its early days, you might remember its rise and fall after the security issues they had back in COVID times. If not, here’s a breakdown of what happened and the latest updates on the investor settlement.

Long story short: In 2019, Zoom went public, raising $357M. Big investors, like Cathie Wood, put money into this company. And, at first, all seemed to be on track for them: Zoom was a pandemic superstar, with its stock soaring almost 900%.

However, soon, it was accused of hiding problems with its software encryption, vulnerability to hackers, and sharing personal information with third parties, including Facebook.

The company reassured users and investors that it provided full end-to-end encryption, but later disclosures revealed that Zoom was only using transport encryption, which is significantly less secure.

These revelations led to a 20% decline in ZM, and a lawsuit from investors.

After years of legal proceedings, Zoom has agreed to pay $150M to settle claims from investors, resolving allegations that it misrepresented its security capabilities. The deadline for filing a claim is in September 2025. you can check the latest updates and file for payment here.

Now, despite reporting strong earnings and some developments on AI-driven innovations, Zoom's stock remains far below its pandemic-era highs, currently trading around $75, well off its peak of $568 in 2020.