Those strategies could help Zoom shake off its reputation as a one-trick pony and support its long-term evolution into a cloud-based communications giant. For a company like Zoom that has been so tied in investors’ minds to the pandemic, it can be difficult to take a step back and see the forest for the trees. Taken without the noise of the past two years, Zoom is clearly a buy for existing shareholders or those investors looking to start a position.
Further, Zoom stock holds an IBD Composite Rating of 73 out of 99. The best growth stocks have a Composite Rating of 90 or better. Also, Zoom Video has forged new deals in the enterprise market, such as one with software maker ServiceNow (NOW). Yuan then https://www.tradebot.online/ became Cisco’s corporate vice president of engineering for collaboration software. Eric Yuan, Zoom’s chief executive and founder, came to the U.S. in 1997. He started out with WebEx Communications and eventually became its vice president of engineering.
- The platform connects people via video, phone, chat, and content sharing and can be integrated across a broad range of devices.
- As a long-term investor, I don’t ignore past performance, but I’m generally more interested in where the company is heading.
- Zoom is still generating healthy growth on top of its triple-digit percentage revenue growth last year, but the market’s reaction indicates investors are still worried about its post-pandemic growth.
- Zoom earnings for the quarter ending Jan. 31 were 1.42 per share on an adjusted basis, up 16% from a year earlier.
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun owns shares of Cisco Systems and Zoom Video Communications. The Motley Fool owns shares of and recommends Five9, Microsoft, and Zoom Video Communications. Because of this, it is helpful to take a look at Zoom’s performance as compared to 2019. After all, year-over-year comparisons in 2021 are facing some awfully tough comparisons to 2020, when demand was at its peak. The chart below compares Zoom’s Q3 of 2022 (ending Oct. 31, 2021) to the corresponding quarter two years ago.
The video conferencing software company’s stock tumbled after its latest earnings report.
The consensus among Wall Street research analysts is that investors should “hold” ZM shares. A hold rating indicates that analysts believe investors should maintain any existing positions they have in ZM, but not buy additional shares or sell existing shares. There is one caveat worth mentioning — Zoom’s growth in the coming years is expected to let up significantly from current levels. 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. Analysts are forecasting Zoom’s revenue to come in at $7.7 billion in fiscal year 2026, indicating an average annualized growth of 13% from 2022 estimates.
Rivals also include bundled productivity solution providers with video functionality such as Alphabet Inc.’s (GOOGL) Google G Suite and Microsoft Inc.’s (MSFT) Microsoft Teams. Other competitors are unified communications as a service (UCaaS) and legacy private bank exchange (PBX) providers such as 8×8 Inc. (EGHT), Avaya Holdings Corp. (AVYA), and RingCentral Inc. (RNG). Zoom ended the second quarter with 2,278 customers contributing more than $100,000 in revenue over the past 12 months, which represented 131% growth from a year ago.
Key Executives
This puts Eric S. Yuan in the top 30% of approval ratings compared to other CEOs of publicly-traded companies. MarketBeat’s analysts have just released their top five short plays for March 2024. Learn which stocks have the most short interest and how to trade them. Zoom Video Communications (ZM -0.07%) rewarded shareholders who bought the stock prior to the pandemic, returning 391% in 2020. The company was a clear beneficiary of the work-from-home environment, a trend that is still very evident today. Bureau of Labor statistics released in January, 11% of workers were still teleworking as of December 2021.
At the end of fiscal 2021, Zoom predicted its revenue would rise 42%-43% in fiscal 2022, compared to its latest guidance for 51% growth. Therefore, Zoom clearly prefers to temper Wall Street’s expectations instead of raising the bar too high and setting itself up for a big earnings miss. Zoom Video reported January-quarter earnings and revenue that topped estimates and announced a $1.5 billion buyback of its own shares. Zoom’s valuation has surely contracted, but it’s still not desirable when observing the company’s peer group. 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 revenue rose 54% year over year to $1.02 billion during the second quarter and beat estimates by nearly $30 million.
As mentioned above, on Sept. 30, 2021, Five9 announced that the two parties had mutually agreed to abandon the deal. The company said that the agreement had not received the required number of votes from Five9 shareholders to approve the merger. Earlier in September, The Wall Street Journal reported that a U.S. Department of Justice-led panel, named Team Telecom, was investigating the proposed merger’s potential national security risks. The company is headquartered in San Jose, Calif., and has additional offices in more than 15 locations in the United States, Europe, Asia, and Australia. New Rank-Based ScoringMarketRank™ is calculated by averaging available category scores (with extra weight given to analysis and valuation), then ranking the company’s weighted average against that of other companies.
Zoom Phone was called out on the most recent earnings call as having triple-digit year-over-year revenue growth, showing these new initiatives are starting to pay off. All successful companies find ways to keep expanding their business in order to create new revenue streams and remain relevant in an ever-changing world. In order to do this, businesses need the cash to invest in research and development and capital improvements.
Zoom has the balance sheet to do this and has been very active in rolling out new products. By taking out of the equation the volatility of the past two years and viewing Zoom’s performance on this two-year basis, we see just how remarkable the growth of its business is. More importantly, the growth in larger customers — those with more than 10 employees and those spending more than $100,000 in revenue — provides a large base to upsell new features and hardware options as Zoom’s offerings expand.
Zoom Stock: Is It A Buy Right Now?
Meetings on the platform can host as many as 1,000 participants, while webinars can scale up to as many as 50,000. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer.
ZM Stock News Headlines
Zoom ended the last quarter with $5.4 billion in cash, cash equivalents, and marketable securities and only $97 million in debt. To that end, Zoom has recently introduced Zoom Phone, Zoom Meetings, Zoom Video Webinars, and Zoom for Home. Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling. As the coronavirus crisis eases, retaining small businesses as well as corporate accounts will be one key to Zoom’s success.
A history of conservative guidance
On average, they anticipate the company’s share price to reach $78.00 in the next year. This suggests a possible upside of 16.0% from the stock’s current price. View analysts price targets for ZM or view top-rated stocks among Wall Street analysts. 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 growth will inevitably decelerate in a post-pandemic world, but investors should still note how often it “sandbags” its guidance.
Zoom’s operating margins are expanding as its scale improves and its data center capacity rises. With the coronavirus emergency long over, the clock is ticking on Zoom Video Communications (ZM). A rebound in revenue growth for Zoom stock depends on its success in the corporate market. And the outlook for ZM stock is tied to whether the company morphs into a broader business communications platform. 17 Wall Street research analysts have issued “buy,” “hold,” and “sell” ratings for Zoom Video Communications in the last twelve months. There are currently 2 sell ratings, 10 hold ratings and 5 buy ratings for the stock.
A “Zoom Meeting” refers to a videoconferencing session hosted on its cloud infrastructure. Paid Zoom business plans cost $15 or $20 per employee and require minimums of 10 or 50 seats. Zoom Video in early March said company President Greg Tomb, a former cloud computing executive at Alphabet’s (GOOGL) Google, will leave. In May, Zoom announced an investment in AI startup Anthropic to support research roadmaps.