Zoom Video Communications (ZM 2.34%) 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. Research and a sense of your overall portfolio can help you decide how much money to invest in Zoom. So, too, might your opinion on how long people will continue to work and dial in from home. During that period, its net income of $339 million surged 63% higher.
Zoom Video Communications Third Quarter 2025 Earnings: Beats Expectations
Zoom is also the focus of several ongoing federal investigations related to its dealings with Beijing, according to the Journal. Zoom’s latest fiscal year (FY) was FY 2021, which ended Jan. 31, 2021. For that period, the company reported net income of $672.3 million on revenue of $2.7 billion.
Zoom Communications price target raised to $95 from $78 at Rosenblatt
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. 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.
Should investors buy Zoom stock?
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’s valuation has surely contracted, but it’s still not desirable when observing the company’s peer group. Today, Zoom is trading at 31.6 times earnings, whereas top competitors like Cisco (CSCO -0.50%), Microsoft (MSFT -1.17%), and Alphabet (GOOGL 0.07%) (GOOG 0.12%) are trading at price-to-earnings multiples of 20, 31, and 24, respectively.
The chart below compares Zoom’s Q3 of 2022 (ending Oct. 31, 2021) to the corresponding quarter two years ago. Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about. “This change reflects our evolution into an AI-first work platform for human connection and our vision for long-term growth,” founder and CEO Eric Yuan said on a conference call. Zoom Video Communications (ZM 2.34%) is a bit of a mystery as a growth stock. 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.
As of Aug. 23, 2021, Zoom had 240,744,533 outstanding shares of Class A common stock and 56,383,369 outstanding shares of Class B common stock. 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.
- It is a comprehensive communications ecosystem that includes team chat platforms, online whiteboards, VoIP phone service, workspaces, email, and other services.
- Asking for a Trend host Josh Lipton breaks down the latest action surrounding these two stocks.
- Zoom has almost no debt, boasting a debt-to-equity ratio of 2% and a strong cash position of $1.3 billion.
- And yet the business performed solidly throughout the past few years even as the stock fell.
Select to analyze similar companies using key performance metrics; select up to 4 stocks. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Luke Meindl has no position in any of the companies mentioned.The Motley Fool owns and recommends Alphabet (A shares), Cisco Systems, Microsoft, and Zoom Video Communications.
A general guideline for investors is to spread money across different companies, industries and geographies, thereby reducing risk and exposure to any one stock’s sudden movements. You’ll need to add money to the account and then search for “ZM” within the brokerage’s platform. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.
Asking for a Trend host Josh Lipton breaks down the latest action surrounding these two stocks. To watch more expert insights and analysis on the think markets review latest market action, check out more Asking for a Trend here. 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. 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.
Department of Justice-led panel, named Team Telecom, was investigating the proposed merger’s potential national security risks. Meetings on the platform can host as many as 1,000 participants, while webinars can scale up to as many as 50,000. Please bear with us as we address this and restore your personalized lists. Don’t let Zoom’s past success dictate your decision to invest forex trading psychology in the company today.
Top 20 Best-Performing Stocks: November 2024
Prior to founding Zoom, Yuan was corporate vice president of engineering at Cisco, and was a founding engineer and vice president of engineering for web and videoconferencing platform Webex. The U.S. government has been increasing its scrutiny of Zoom on several fronts. In 2020, the United States charged a China-based Zoom executive with conspiring to disrupt videoconference commemorations of the 1989 Tiananmen Square democracy protests.
Consider whether you should buy Zoom stock
In other words, all the things that can help investors determine if Zoom is a worthy addition to their portfolio. Its forward price-to-earnings (P/E) ratio is just under 14, and the price-to-sales (P/S) ratio of less than 5 is just above all-time lows. That valuation positions the stock for a massive surge if the company can stoke a recovery in revenue growth. Zoom Video Communications Inc. (ZM) offers a video-first communications platform used by millions of people worldwide for both responsive web design business and personal use. 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.
That was not enough to persuade investors to buy Zoom stock, as it is up just 1% from year-ago levels. Admittedly, the company’s results have come nowhere close to matching that expected growth. In the first nine months of 2023, revenue of $3.4 billion increased by only 3% yearly. Ark Invest has backed estimates up by taking a significant position in the media stock.