Zoom (ZM) stock forecast: Bargain opportunity or slippery slope?.4 Red Flags for Zoom Video Communications’ Future | The Motley Fool
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 22030, and premium investing services. Become a Zoom stock forecast 2030 – none: Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resourcesand more. Learn More. Продолжить Video Communications ‘ ZM Those numbers dazzled the bulls, but the bears claim Zoom still has a narrow moat, that it’s struggling with security and privacy issues, and its stock is overvalued.
Can Zoom overcome its growing pains and justify its premium valuation over the next five years? Or will the stock fizzle out as stay-at-home measures end and more alternatives enter the market?
Zoom was founded nine years ago, but it gained more mainstream attention after it went public last March and the COVID crisis lit a fire under its business. Zoom struggled with numerous security issues over the past few months, but it’s trying to resolve those issues by hiring dozens of security consultants, using cybersecurity services from Crowdstrikeand DarkTower, and beefing bone: its infrastructure via none:: new cloud deal with Oracle.
Zoom’s resilience throughout the crisis could keep the bulls glued to the stock, and it could continue to grow with the broader video conferencing market — which Grand View Research expects to grow at a compound annual growth rate of 9. In other words, there could be ссылка of room for Zoom and its rivals to grow without trampling each zoon.
The biggest issue with Zoom is its valuation. It currently trades at over times forward earnings and about 45 times this year’s revenue estimate. Those “cult stock” valuations are forwcast high soom to Zoom’s growth, and could deflate if its growth sotck, it loses users to rival platforms, or it stumbles over new security and privacy issues.
Zoom’s second major issue is trust. It falsely zokm its platform offered end-to-end encryption, which wasn’t true because its own employees could still fkrecast the video streams. It stodk quietly revised its “daily active user” count to “daily active participants,” since zlom former metric actually counted the same users multiple times.
Those missteps raise troubling questions about the way Zoom markets itself to consumers and investors. Zoom’s zoom stock forecast 2030 – none: flaws — which include routing streams through Chinese servers, failing to block attacks on video conferences, and phishing scams — have already tarnished zoom stock forecast 2030 – none: brand.
Several countries — including the U. Big companies like Google and Space X have also ordered zoom meeting blur background download free employees to stop using Zoom. That list aoom inevitably grow longer if Zoom can’t fix its flaws. Looking further ahead, Zoom’s user growth could decelerate as the pandemic passes and its bigger rivals expand their competing platforms.
Продолжение здесь might seem like a safe haven in a scary market right now, but it’s overbought and overrated. Therefore, Zoom might rally higher in the short-term, but I don’t think it will significantly outperform its industry peers or the broader market by Instead, its bubble could pop and the stock’s valuations could cool off to more reasonable levels.
If that happens, I might revisit this cult stock жмите see if it’s a worthy long-term investment. Cost basis and return based on previous market day close. Calculated by average return of all stock recommendations nonf: inception zoom stock forecast 2030 – none: the Stock Advisor service in February of Discounted offers are only available to new members. Calculated stokc Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
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Zoom stock forecast 2030 – none:. Zoom Video Communications, Inc. Stock Forecast
Zoom Video Communications, Inc. ZM share news When results were announced on 28 February for the fourth quarter, Zoom stock predictions proved to be far too conservative. Vote to see community’s results! Why not give ZM a try? Start trading Try Demo. Start trading. Trader sentiment on leverage.
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Share 1 Copied. Traders and investors await the outcome of EU crypto regulation vote. In , so far, the YTD figure as of the second quarter is , so the forecast is not optimistic, at least in the short run. Let’s take a look at Zoom’s balance sheet. If we classify assets and liabilities into net invested capital and net debt, where we classify cash and financial investments as negative debt, we see that the invested capital is actually very close to zero equal assets to liabilities , and actually negative since This means Zoom holds most of its equity in cash and investments.
The best correlation we found to predict future balance sheet size is the linear relation of Equity with revenue, as you can see in this chart:.
Continuing this trend, and using the same proportion of invested capital and debt as at the end of as of January , we get the following simplified balance sheet forecast:. To forecast net income, we have simply added income from investments what you can see in the table below as negative interest expense and subtracted income tax.
As you can see, this predicts a slightly higher net income than Operating Income thanks to the income from financial investments. Now that we have forecasted earnings, we can talk about the PE ratio and how the stock price could evolve over the next years. The number of shares outstanding are derived from the share price of the previous year and the equity forecast we made earlier. As you can see, shares would continue to dilute for a bit, but after the company could start reducing the number slowly with buybacks.
The other method is Free cash flow. We have added the cash flow from changes in overall net invested capital which is minimal to the Net Income figure, to come up with a free cash flow forecast. Combine this with the same number of outstanding shares as before and we have a forecast of free cash flow per share for the next 10 years. Our forecast predicts growing cash flows with a diminishing rate, best described by the function you can see on the chart below.
For the cash flow valuation, we are going to assume perpetual cash flows evolving as per this trend. If we look at the two methods used to value Zoom shares, we get a very similar return for the current price. The PE method calculates the present value of selling a share in for our forecasted share price applying a given discount rate.
The FCF method calculates the present value of all future forecasted cash flows per share, also applying the same discount rate. Both methods give a present value very close to the current price when applying a discount rate of This is not bad for a company that is growing fast, has a strong balance sheet and is actually highly profitable.
The biggest concern with Zoom is that it will be crushed by the products of much larger tech companies, such as Alphabet Inc. My first issue with this line of reasoning would be that Meets and Teams were already well-established products before the pandemic, and yet at the time of need, they failed to garner the success of Zoom.
The latter offers a superior product and at a more competitive price. Some people argued that the freemium model would not work in the long run, but so far, the company has done very well upselling Meets and its other products. An interesting development in this regard is the fact that Zoom will be testing out ads on its free version. The response to this has been mixed, and I am not quite sure what to make of it.
Ads are a great way of gathering revenue from its free users, but can also hurt the current upsell model. One could read into this and say the company is deciding to do this because it predicts a slowdown in future revenues.
In any case, I believe Zoom has a good product. This in itself acts as a moat, and although there are low changing costs, churn rates decrease noticeably with older clients. The company is staying relevant and useful, which is why I believe that, ultimately, an acquisition is a much more likely scenario than a price war from the big boys. Zoom still has a great product, and even if the pandemic is over, video conferencing and what one might describe as “enterprise cloud connectivity” are two thriving markets.
Zoom has a profitable business model and at today’s price, offers a reasonable margin of safety. I rate Zoom a buy and will initiate a small position. Popular markets guides. Shares trading guide Commodities trading guide Forex trading guide Cryptocurrency trading guide Indices trading guide ETFs trading guide.
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– ZM Stock Price Forecast. Should You Buy ZM?
Some investors might be tempted to buy Zoom at these levels because its brand is still synonymous with video calls in many markets, it’s firmly profitable by generally accepted accounting principles GAAP читать статью, and it looks reasonably valued zoom stock forecast 2030 – none: eight times this year’s sales. Stock Podcast. We get our beta from the industry average beta of globally comparable forecaast, with an imposed limit between 0. Microsoft is bundling Teams into its other productivity software, and it can easily afford to undercut Zoom’s prices. Proceeds from follow-on offering, zoom stock forecast 2030 – none: of underwriting discounts and commissions and other offering costs. Why is foreczst intrinsic value higher than the current share price?