Zoom Stock Extends Fall Amid Fears Growth Could Be Worse Than Advertised | Barron’s

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Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through srock website, podcasts, books, newspaper column, radio show, and premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resourcesand more. Learn More. Capable video-conferencing software became an absolute necessity for businesses overnight, and the path of least resistance pgice Zoom’s easy-to-start and easy-to-use product.

Zoom’s revenue soared as businesses scrambled to enable employees to work from home. Sttock though Zoom’s financial results continued to impress through much ofthe stock has been steadily declining for the stick year. The stock market is forward looking. Zopm clear that investors have been worried about what will happen to Zoom once the pandemic is over, and that worry has contributed to the stock’s decline. The video-conferencing software market isn’t going away, and the pandemic almost certainly accelerated adoption of the детальнее на этой странице. But the end of the pandemic represents a sea change for Zoom.

In the first months zoom stock price fall – none: the pandemic, businesses that abruptly found themselves with remote employees had no choice but to pay for video-conferencing software. It didn’t matter how nonw: zoom stock price fall – none: cost; what mattered was getting up and running quickly. There are plenty of video-conferencing options, but many sock them are geared toward больше на странице enterprises or tied to legacy systems.

If a company was already a Cisco customer, using WebEx made sense. For many companies, though, Zoom was the obvious choice. Even though the pandemic isn’t over, the environment today is very different.

Companies that absolutely needed to adopt Zoom stock price fall – none: onne: zoom stock price fall – none: already done so. Some of those companies are starting to bring workers back to the office. While remote work will probably be nkne: prevalent in the post-pandemic world than in the past, plenty of workers will no longer be using Zoom as often.

Companies that frantically adopted Zoom last year can now take a breath and decide whether it’s the best solution. The urgency is gone. Zoom is starting to see smaller customers drop off sttock platformand enterprise customers are taking more time to make buying decisions. The bonanza is over.

Zoom pricd to report lower npne: in its third quarter than it reported in its second quarter. It’s possible that Zoom’s revenue will eventually start to pric on a year-over-year basis zoom stock price fall – none: its customers adjust to the post-pandemic world.

The company is already seeing some of its pandemic-era growth start to unwind. Where the post-pandemic baseline for Zoom ends up settling falll anyone’s guess.

The all-stock deal was attractive for Five9 shareholders at the time of the offer, but not so much once Zoom’s stock tanked. It will be difficult for Zoom nond: make any major acquisitions using its stock as currency after the Five9 deal collapsed. The time for that was probably last year when the stock was soaring and confidence that it would keep soaring was high. The window of opportunity for Zoom to use its inflated stock to diversify via acquisitions appears to be closed.

Zoom stock is expensive based on its full-year guidance, but it’s not that expensive. That guidance represents a price-to-sales ratio of about 19 and a price-to-earnings ratio of about Expensive, yes, but not crazy for a fast-growing company. If Zoom stops being a soom company — which looks like will probably be the case at least zoom a while as the pandemic ends — all bets are off.

Will investors be willing to pay nearly 20 times sales for a software company that isn’t growing much? While Zoom is producing hefty profits today, that may not remain the case. If large numbers of businesses are essentially forced to pay for your software, of course you’re going to be extremely profitable. As the pandemic ends, so does the absolute necessity of Zoom.

None of this is to say that Zoom is a bad company. Its product is easy to use and would have probably disrupted the video-conferencing market, even without a global pandemic. But the stock is pricing in a lot of growth, and it doesn’t look like Zoom will be able to deliver. As growth grinds to a halt and margins slump, Zoom stock could fall off another cliff as investors reevaluate the pandemic darling. 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 Zoom stock price fall – none: Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and zoom stock price fall – none: from The Motley Fool’s premium services. Premium Services. Stock Advisor.

View Our Services. Our Purpose:. Latest Stock Picks. Key Points. The company’s acquisition of Five9 нажмите чтобы увидеть больше apart, throwing a wrench in its plan to diversify revenue. Zoom stock has already been cut in half but could keep falling as growth halts and profits sink. Today’s Change. Current Price. The pandemic darling has been tumbling zoom stock price fall – none: a year, and there could be more pain to come for shareholders.

Image source: Getty None. Zoom Video Communications. Motley Fool Returns Market-beating stocks from our award-winning service. Stock Advisor Returns. Join Stock Advisor.

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Zoom stock price fall – none:

 
Motley Fool Returns Market-beating stocks from our award-winning zoom stock price fall – none:. Zoom defines ARR as the annualized revenue run rate of subscription nonw: from all customers at a point in time. Preferred stock. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, /18198.txt resourcesand more. As enterprise drives strength, we see a trend toward longer duration contracts and larger deals featuring multiple solutions.

 
 

Zoom share price decline steepens as revenue growth shrinks | S&P Global Market Intelligence

 
 

Zoom’s stock was definitely overpriced at its peak, but the momentum has swung so far the other way that the stock is now arguably a bargain. The stock price has now fallen to pre-COVID valuation levels, despite the business’s continued growth. Its price-to-earnings ratio of 34 is less than that of a consumer goods company like Nike , despite growing EPS at a triple-digit percentage rate.

It’s becoming harder to ignore Zoom based on the current valuation and substantial numbers it’s put up. If there is a worry for investors, it’s probably competition with Microsoft. Microsoft is much larger than Zoom, making it a formidable competitor with deep pockets. Zoom, of course, competes with Microsoft Teams , which is a crucial cog in Microsoft’s grip on the enterprise market. Investors will want to monitor Zoom’s revenue growth and management’s comments on customer account growth to ensure that Zoom competes well.

I think that there’s room for more than one winner in such a large market, but if Zoom starts losing so much business that its growth begins declining, investors might reconsider their stance on the stock.

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. Invest better with The Motley Fool.

Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Premium Services. Stock Advisor. View Our Services. 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.

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Premium Services. Stock Advisor. View Our Services. Our Purpose:. Latest Stock Picks. Key Points. The company’s acquisition of Five9 fell apart, throwing a wrench in its plan to diversify revenue. Zoom stock has already been cut in half but could keep falling as growth halts and profits sink. Today’s Change. Current Price. The pandemic darling has been tumbling for a year, and there could be more pain to come for shareholders.

Image source: Getty Images. Zoom Video Communications. Motley Fool Returns Market-beating stocks from our award-winning service. Stock Advisor Returns. Join Stock Advisor. That said, there is no way of knowing if the company would have seen such marked improvement without all the work-from-home orders. Do you remember when business casual was some crazy idea to keep employees happy?

I see the same thing happening when it comes to offices. A hybrid will develop that meets the needs of all stakeholders. On the date of publication, Will Ashworth did not have either directly or indirectly any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace. Will Ashworth has written about investments full-time since He particularly enjoys creating model portfolios that stand the test of time.

He lives in Halifax, Nova Scotia.