Zoom (ZM) stock forecast: Bargain opportunity or slippery slope? – Zoom stock news and major price drivers

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Learn More. Zoom Video Communications ‘ ZM That sell-off continued after its third-quarter report on Nov. At first glance, Zoom’s headline numbers looked solid.

However, Zoom’s growth continues to decelerate, and its guidance indicates that the slowdown will continue. Let’s take a closer look at Zoom’s growth rates, outlook, and valuations to see if it’s still a worthy investment.

Zoom was already generating robust growth back in fiscal , which ended in January of that year, before the pandemic hit. When the pandemic forced more people to attend classes and work remotely, its growth accelerated to breakneck levels in fiscal However, those tailwinds waned throughout fiscal as vaccination rates rose and more people physically returned to classrooms and offices:.

Both of those forecasts surpassed analysts’ expectations and indicated the company could still generate impressive double-digit growth on top of its triple-digit growth last year. Those estimates will likely be raised after its latest report, but they still imply the company will face increasingly difficult year-over-year comparisons as the pandemic ends.

Zoom also faces tougher competition in that slowing market. Last quarter, Microsoft said organizations had more than , Teams users, and more than 3, organizations had over 10, Teams users.

But Microsoft isn’t killing Zoom yet. However, Zoom is still aware that it needs to expand its ecosystem beyond video calls to stay competitive. The deal was called off in September, but Zoom is still working closely with Five9 to expand its cloud-communications capabilities. Zoom also recently started testing out post-video ads for its free users. Those ads might enable Zoom to monetize the tens of millions of free, loss-leading users that it gained throughout the pandemic and stabilize its revenue growth, even as it gains fewer new users.

However, Zoom’s stock still isn’t cheap at 52 times forward earnings and 15 times next year’s sales. Those valuations would be reasonable if Zoom’s growth rates were more predictable, but they’re simply too hot for a company in the midst of an ongoing slowdown. Salesforce’s stock trades at 66 times forward earnings and just nine times next year’s sales.

I own some shares of Zoom, but I don’t think it’s the right time to double down on this polarizing stock yet. Zoom has an attractive brand and a sticky platform, but it’s unclear if it can continue generating double-digit sales growth as the pandemic ends and Microsoft aggressively expands Teams.

Instead, I’d monitor Zoom’s growth over the next few quarters to see if its year-over-year growth stabilizes before buying any more shares. 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. Today’s Change. Current Price. The pandemic-era darling continues to lose its momentum. Image source: Zoom. Zoom Video Communications.

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Edited by Alexandra Pankratyeva. Zoom has been used extensively during the Covid pandemic. Will Zoom stock overcome this recent downturn? Zoom Video Communications was founded in by Eric Yuan, who remains its chairman and chief executive.

The video conference platform attracted one million users by Based in San Jose, California, the company went public in April On 31 August, Zoom stock fell On 23 November, Zoom saw its second worst day of the year as stock prices dropped Eventually, the multi-billion-dollar merger was mutually terminated by Five9 and Zoom.

Zoom investors also face the risk from increasing competition. On 2 December, software giant Microsoft introduced a new low-cost tier of its Teams communication service for small businesses. However, Zoom bulls view the recent downturn as a buying opportunity.

Third quarter revenue posted a 2. According to Reuters , as of 6 December, Zoom stocks scored a mean rating of 2. Past performance is no guarantee of future results. Always remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money.

And you should never invest more than you can afford to lose. Zoom faces questions about its ability to deliver growth as pandemic-related tailwinds begin to wane for its stay-at-home video conferencing solutions. There are no guarantees. Markets are volatile. You should conduct your own ZM stock analysis, taking in such things as the environment in which it trades and your risk tolerance.

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Capital System status. Get the app. Log In Trade Now. My account. Zoom ZM stock forecast: Bargain opportunity or slippery slope? Share this article Tweet Share Post. Have a confidential tip for our reporters? Get In Touch. The origins of Zoom Zoom Video Communications was founded in by Eric Yuan, who remains its chairman and chief executive. GME Swap Short:. Trade now. AAPL GOOG TSLA Is Zoom a good stock to buy?

Why is Zoom stock down in ? Will zoom stock go up? What You Need to Know The week ahead update on major market events in your inbox every week. Rate this article. You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.

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Zoom Stock Falls as Revenue Growth Continues to Slow | Barron’s – Elevator Pitch

 

Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our 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 resources , and more. Learn More. Zoom Video Communications ‘ ZM However, investors might be wondering if the stock can still generate multibagger gains this year as the pandemic ends.

Let’s take a fresh look at Zoom’s strengths, its growth rates, and its valuations to see if its high-flying stock could at least double again this year. Zoom attracted millions of users throughout the pandemic because it was easier to use than many other video conferencing platforms.

Its free tier, which provided group calls for up to 40 minutes, roped in new users and nudged them toward paid tiers, which extended the time limit and added premium features like cloud-based recording, transcripts, and single sign-ons.

Zoom had already generated impressive returns prior to the pandemic thanks to its growth among enterprise and education users. Zoom’s revenue and earnings growth accelerated significantly throughout the first three quarters of the year:. During the peak of the pandemic last April, Zoom claimed its meetings were hosting million active participants per day. That figure likely rose throughout the second and third quarters. Zoom’s growth among large enterprise customers also accelerated. Those growth rates are impressive, but Zoom didn’t provide any clear guidance for fiscal Instead, we should review the facts.

These big tech rivals can all afford to undercut Zoom’s prices. However, Zoom could still attract users and companies that don’t want to tether themselves to those big tech ecosystems. Its strong brand recognition, which has made it synonymous with video calls, could also prevent users from trying out competing services.

Second, the influx of free users, especially among schools, has been throttling Zoom’s gross margins. However, its operating margins are improving as its revenue growth outpaces its operating expenses:. But during last quarter’s conference call , Zoom CFO Kelly Steckelberg warned that the company’s operating margins would continue to contract sequentially as it expands its sales teams and invests in new products like its voice-only Zoom Phone platform and its OnZoom marketplace for online events.

It’s also unclear if Zoom can reduce its dependence on free users to boost its gross margins again. Steckelberg expects Zoom’s gross margins to remain “consistent” with its third quarter throughout fiscal before expanding again — but that could be challenging if its revenue growth decelerates after the pandemic ends. I recently warned that Zoom’s valuations were too hot to handle , and I stand by that assessment.

That might seem like a reasonable valuation, especially compared to other high-growth tech stocks, but it’s a high price to pay for a company that faces uncertain post-pandemic returns. Pandemic-related fears could still drive this stock higher this year, but I believe fundamental gravity and concerns about its long-term growth will prevent its stock from doubling or replicating its jaw-dropping gains from 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. Today’s Change. Current Price. This high-growth company will face tough comparisons this year.

Why did people flock to Zoom? Image source: Zoom. Zoom Video Communications. Motley Fool Returns Market-beating stocks from our award-winning service. Stock Advisor Returns. Join Stock Advisor. Our Most Popular Articles. Wondering What’s Next for Inflation and Consumers? Walmart Just Released a Big Hint. Get Started Now. View Premium Services.

 
 

Zoom share price forecast 2021 – none:

 
 
As economies opened up in , Zoom stock fell out of investor favour, losing 48% of its value year-to-date, as of 6 December. What is the future for the Zoom share price forecast? still rate ZM a buy, 15 recommend holding the stock, but none gives a sell rating.