– ZM Stock Price Forecast. Should You Buy ZM?
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Learn More. In this Fool Live video clip, recorded on Jan. Jon Quast: Well, I don’t think that we’re the first trio to have different views on Zoom the stock, because the stock market, in general, has been very polarized when it comes to Zoom Video Communications — stock symbol ZM. Normalized from IPO, it’s still a good performer. But one of the things that — as we’re talking about Zoom I will go ahead and just show the valuation here.
So, it actually has earnings, it has GAAP generally accepted accounting principles earnings. This is a technology company with real earnings here, trading at about 39 times trailing earnings. Then you look at the price-to-sales ratio, here at 11, has never been cheaper as a public company. One of the things that is very interesting with Zoom to me: We all know Zoom, we’re using it right now, like Matt said.
Many companies wound up subscribing to Zoom during the pandemic. At the start of the pandemic, they needed to start subscribing to Zoom. This is primarily a corporate solution, not a consumer solution. Many, many companies are using it to manage their remote workforces and become this hybrid enterprise in today’s modern world. They are continuing to subscribe. Retention rates are extremely good, and the economics of the business are extremely good for Zoom.
Now, what makes it interesting to me going forward — this is assuming that these retention rates hold up as they have — but the two products on Zoom’s radar right now are Zoom Rooms, which modernizes the conference room, and Zoom Phone, which modernizes the internal infrastructure of the phone system at companies.
What makes it interesting to me here is, as the pandemic abates, I would expect that companies are looking to upgrade their corporate offices to more account for the fact that hybrid work is still here, to an extent, for the foreseeable future. When you look at the market opportunity — and these are cherry-picked, of course, from the company. The company is going to show some very good examples of this.
That’s just normal, how companies work. So take it with a grain of salt. But case study No. Case study No. As the pandemic unwinds and Zoom becomes a more mature company, it’s inevitable that sales growth will come down from its all-time highs. This is more favorable than Zoom’s expected top-line scenario, but many investors still might be hesitant to pay a lofty valuation for the company when taking into account the deceleration in growth. Zoom’s valuation has surely contracted, but it’s still not desirable when observing the company’s peer group.
Today, Zoom is trading at Given the expected slowdown in Zoom’s growth, I think it’s safe to say that the company is still trading at expensive valuation multiples. Zoom’s financials remain strong, but I think the company needs to improve future growth prospects to justify trading at current valuation multiples. With revenue and earnings growth expected to pull back in the years ahead, I wouldn’t be surprised to see growth-oriented investors exit their positions in Zoom stock.
The slowdown in growth, combined with ongoing macroeconomic headwinds and geopolitical concerns, will put additional downward pressure on Zoom’s valuation for the foreseeable future. As a long-term investor , I don’t ignore past performance, but I’m generally more interested in where the company is heading. Zoom has provided investors with spectacular growth and returns in the past couple of years; however, I don’t see that continuing into the future.
The pullback in pandemic-driven demand, in addition to increased competition from massive tech companies like Microsoft and Alphabet, will challenge Zoom’s business moving from here on out. With growth expected to hit the breaks in the years ahead, the company will likely become less attractive to investors who bought into Zoom’s growth story. In addition to that, I don’t think Zoom is currently trading at an attractive-enough valuation — investors who are still excited about the stock may be wise to wait for a larger decline before considering an investment.
Zoom’s future doesn’t look quite as bright as it once did. 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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ZM Stock Is a Buy Despite Its Drop From Highs | InvestorPlace – Don’t let Zoom’s past success dictate your decision to invest in the company today.
Is Zoom Stock A Buy Or Sell In Post-Pandemic Economy? Investor’s Business Daily. AM Zoom earnings were much better than everyone feared: Analyst. ZM | Complete Zoom Video Communications Inc. stock news by MarketWatch. Sell; Under; Hold; Over; Buy Why That’s a Good Thing for the Stock. Stock Quote. NASDAQ GS: ZM. $ Jun 3, PM EDT. Change; (%): Volume; 3,, Today’s Open; $ Previous Close; $
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