Why Zoom Stock Was Zooming on Wednesday – The Globe and Mail
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Learn More. Zoom Video Communications ZM The company was a clear beneficiary of the work-from-home environment, a trend that is still very evident today. According to the U. It’s possible that the pandemic will have a lasting impact on our working environment, as many companies will be more open to a flexible work schedule moving forward. With Zoom well-positioned to capitalize on that new reality as a leader in the space, is today a great time to consider buying the company’s stock?
The significant climb in free cash flow was a result of superb revenue growth stemming from pandemic-driven demand. 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.
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.
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Stock Advisor. View Our Services. Our Purpose:. Latest Stock Picks. Key Points. The company’s valuation has withered, but it’s still not at optimal levels for shrewd investors. Today’s Change. Current Price. Don’t let Zoom’s past success dictate your decision to invest in the company today.
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Is Zoom Video Communications Stock a Buy? | The Motley Fool – Related Stocks
It is lapping difficult comparisons, which may lead to significant multiple compression as investors come to terms with steep deceleration in growth rates. I explain why ZM may provide strong returns in the bullish scenario, but also why I predict muted returns over the next 6 years. This deceleration was to be expected, however, as ZM was lapping quarters benefitted by the pandemic.
This represents a net margin of Seeking Alpha. It really depends on your expectations for future growth. I ссылка на подробности seen some argue that ZM has no moat, but I have to disagree on that point – at least anecdotally are zoom shares a buy – none: software has proven easier to use with more stability than competitors.
While the former part of that thesis will likely slow moving forward, I expect the zoom msi part of that thesis to remain in full force. We can see Wall Street consensus estimates below:.
Consensus estimates appear reasonable, if not somewhat optimistic. That would arguably be a stellar return – remember that /26961.txt is highly profitable with a strong balance sheet.
Valuation aside, ZM should be considered one of the lower-risk stocks in the market today. The above are zoom shares a buy – none: assessment shows that ZM is not obviously overvalued, but продолжение здесь I buy it today? We need to make the assumptions a bit more conservative to determine that answer. In this case, ZM would be trading at 8. I also instead use a 1. I would expect ZM to trade at I rate shares a hold and point to better investments elsewhere.
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I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha. I are zoom shares a buy – none: no business relationship with any company whose stock is mentioned in this article.
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Zoom Stock Is a Winner, But How Much Higher Can It Go? – Zoom Stock Forecast FAQ
Mar 21, · Zoom Video Communications, Inc. (NASDAQ:ZM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment . Sep 03, · Even more, Zoom once again gave its full-year outlook a huge upgrade. Now management is expecting full-year fiscal revenue to be between $ billion and $ . Nov 23, · Zoom shares plummeted by nearly 15 percent Tuesday after the work-from-home darling said its sales were slowing when compared to the go-go days of the pandemic. The .