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Zoom Video Communications ZM In this segment of Backstage Pass , recorded on Dec. This company just continues to roll in solid business results. Zoom Phone had year-over-year revenue growth in the triple digits and reached 30 customers now with over 10, paid seats. The revenue growth was fueled by a healthy mix between new and existing customers.

This is reflecting a shift toward longer-term plans. This company continues to execute at a high level, and I’ll add, is more cheaply valued than ever before. Rachel Warren: Brian I feel like you and I talk about Zoom a lot [laughter] because I think we both really love this stock, and I was so excited by its most recent quarter.

A fellow Zoom enthusiast, and I think we both talked about this before. It’s been frustrating to see share-price growth lag behind its business growth over the past year. The company obviously saw this huge share-price appreciation in the earlier days of the pandemic, and that is a cool-down, one could say, in recent months.

I personally believe it will right itself again. But I’m curious: Why do you think that Zoom shares have trailed the market so much over the past year despite its continued success and astronomical growth as a business? Brian Withers: Yeah, we’ve talked about a number of companies that are executing really well and the market has just either pooh-poohed results or overplaying fears of slowing growth and whatnot.

Brian Withers: Yeah. I just look at this company. Now you take any comparison between now and prior to the coronavirus. Every single metric that the company [has] looks much better than it is today.

I believe that hybrid work environments are here to stay, and Zoom is a critical part of enabling companies to do that in the future. So I’m sticking with my Zoom. Cost basis and return based on previous market day close. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of Discounted offers are only available to new members. Calculated by Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

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– Zoom (ZM) stock forecast: Bargain opportunity or slippery slope?

 

There are two ways to make money in the financial markets. The first is to buy businesses with growing cash flow that can pay you dividends, execute share buybacks, and reinvest money читать далее internal projects with a good return on equity. The second way, which many people find to be more fun including me sometimesis to buy stocks that you can sell to others for more than you pay for them on hype.

The first thing to know about Zoom has grown zoom stock predictions 2021 – zoom stock predictions 2021: fast that it’s hard to value. That’s almost 5x growth in 1 year! The question for Zoom shareholders is whether the world zoom stock predictions 2021 – zoom stock predictions 2021: fundamentally reordered itself, or if the ubiquity of Zoom will be a relic from the pandemic.

Источник fact that government-imposed lockdowns seem to have driven this revenue growth rather than user preference makes Zoom extremely tricky to value. Still trading for roughly 44x its sales, Zoom rivals the valuations of tech stocks in Instead, three things have to happen.

I’ll address the points one at a time. The ongoing shift towards work-from-home is natural and good. It’s societal madness to think that millions of people sit in traffic for an hour or more every day commuting to and from central business districts.

It’s a massive waste of time and money, and to add insult to injury, zoom stock predictions 2021 – zoom stock predictions 2021: expenses are not tax-deductible.

As for the second point, Zoom needs to be the best solution for work-from-home to earn its valuation. Some concepts don’t work well with Нажмите для деталей. For example, it’s nearly impossible for private colleges to justify their tuition for longer than the duration of the pandemic by doing больше на странице classes.

Try teaching a bunch of year olds math on Zoom, and you have a recipe for nothing to get done at all. As such, at least some of Zoom’s customers are going to go away.

To font size on screen of computer chat zoom stock predictions 2021 – zoom stock predictions 2021: not necessarily the best format for many kinds of interaction, which caps Zoom’s total addressable market.

As for the third point, every tech company is getting in on the video chat train. This makes it much more difficult for Zoom to grow into its valuation, as much of the future growth they’re expecting could be funneled towards their competitors.

As competitors incrementally improve their products, Zoom’s ability to maintain high margins at scale is likely to come under increasing pressure, as other big tech companies do not need the gross margins that Zoom has for video chat to make sense for them. Competition is a tough thing! There’s an old joke that if you add up all of the market share projections from management teams in the same industry, then the sum will usually add продолжить чтение at least percent.

Since mathematically there is only percent market share to go around, someone has to be wrong. This is often true for IPOs and tech valuations as well, individually if is error 3038 in zoom none: pick right you’ll make a ton of money, but both value investors and short-term momentum traders do better in the long run for the amount of risk they больше на странице. On the fundamental side, Zoom does turn a profit, but its huge growth has come читать статью external events that have created a surge in interest in the company.

Given that their blistering revenue growth will be nearly impossible to sustain after the pandemic, the valuation is probably at least double its intrinsic value. Zoom the company is likely to still be around and will have a fair shot at competing against the rest of big tech. I would expect more /14583.txt secondary offeringswhere Zoom sells stock to the public at prevailing prices and uses it to fund growth.

If used productively, secondary offerings help raise the floor of a company’s value if they zoom stock predictions 2021 – zoom stock predictions 2021: the money they get from shareholders and use it to build a cash hoard and invest in acquisitions. Secondary offerings are likely to put pressure on the zoom stock predictions 2021 – zoom stock predictions 2021: price in the short run, however. I would predict at least 2 secondary offerings for Zoom inas they are in the long-term interest of shareholders at this point.

And if you do that, when you get all through, the value can be Zoom stock predictions 2021 – zoom stock predictions 2021: CRM is paying about 28x sales for перейти на страницу Slack WORKthat’s the best comparable house down the street for Zoom shareholders, so to speak, and probably still a little on the high side. In the short run, momentum is working against them, and their revenue growth and profit margins are both going to see pressure from competition.

The secondary offerings are likely to hurt the share price in the нажмите для продолжения run but help it in the long run, and I think Zoom’s management is making hay while the sun shines with their valuation. A lot of things will have to go right for Zoom to be able to maintain its share price.

I think it’s very likely that you can buy back in at a much cheaper price if you own Zoom once successive rounds of secondary offerings have worked their way through the system. Time will tell whether Zoom can find innovative ways to drive new revenue growth over the next years or whether they’ll fade into the background.

If I held Zoom, I would sell the stock on account of the risk that you’ll permanently lose a chunk of your capital once the world realigns to the post-vaccine new normal. Did you enjoy this article? Follow me for future research updates! I wrote this article myself, and it expresses my own opinions.

I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article. Logan Kane How should investors think about Zoom’s valuation? The world needs to fundamentally and permanently shift towards work-from-home. Zoom needs to be the best solution for work-from-home to be productive.

What will be the future of Zoom? Is Zoom stock a buy or sell? This article was written by. Logan Kane. Author, entrepreneur and Texan. My articles typically cover portfolio strategy, value investing, and behavioral finance. I like to profit from the biases and constraints of other investors.

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