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Zoom Video Communications Inc. C #ZM – American communications technology company

Zoom Video Communications Inc. C #ZM – American communications technology company

2 September 2020

The company provides a platform for communication around the world. The company’s products include Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms. During the pandemic, companies began to use services all over the world, as the format of online meetings, lessons and meetings has become a new standard for many companies and educational institutions. As investors expected the company’s financial performance to rise rapidly, its share price rose more than 380%.

Zoom Stocks YTD

Recently, the company has significantly increased the number of users (from 10M daily users in December 2019 to more than 200M by the summer of 2020), which led to an increase in both revenue and net profit – profit for the current year has already more than doubled its profit for 2019. Despite the fact that Zoom is a young company (established in 2012), it already shows positive bottom line and has no debt.

In the segment of video meetings and calls, the company has many competitors – skype, discord, google hangouts. However, many users prefer Zoom because of the more user-friendly interface. It should be noted that this sector is now developing strongly. And it’s not so much about the pandemic as about the departure of IT companies from their usual office work.

There are many scandals associated with the company, the main reason for which is the vulnerability of users’ personal data.

09/01/2020 the company’s shares rose by ~ 40% after the company exceeded analysts’ forecasts

Investors see a colossal increase in demand for the company’s services as the main driver of the company’s quotes growth.

Comparison of Zoom and S&P 500 YTD Growth

Although the company has increased its audience by almost 20 times, it cannot be said that such excitement of the company will last for quite a long time. After all, many users and companies will return to face-to-face meetings when the pandemic is over. Even despite the fact that many IT companies have transferred their employees to permanent remote work, this will not be a key factor for the further development of the company.

I expect that after the end of the pandemic, the number of users will be approximately 2-4 times more than in December 2019. With such indicators, the company’s share price is greatly overestimated.

In this way, Zoom is truly a promising company with a great future. But, at the moment, the company’s shares are trading well above the market (P / E> 2680).

* All data are specified as of 01.09.2020 5-40 PM GMT + 3

2 September 2020
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