Will Zoom stock be special this year?

2022-01-20T12:41:32
stocks zm Zoom
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Will Zoom stock be special this year?

 

Will Zoom stock be special this year: 2020 has been a good year for Zoom Video Communications stock, with a 396% return for the year.

But 2021 had a different effect, Zoom stock is down about 45.5% for the year and is currently 64.3% down from its 52-week high.

What version of Zoom will we get in 2022? The future is far from certain.

However, there are reasons to believe Zoom will be a standout stock in 2022.

Here’s what investors need to know.

Evest follows Zoom Development in the following report

 

Topics:

Here why Zoom’s stock price is so low

Zoom continues to grow

Zoom Products

 

Here why Zoom’s stock price is so low

Zoom’s business was growing before the COVID-19 pandemic.

Full-year revenue was up 118% annually for the year ending January 2019 (Zoom’s fiscal years extend through the end of January instead of the end of December),
and it was up 88% in the fiscal year ending in January of 2020. All of that growth was before the pandemic.

So we don’t think it’s fair to call Zoom a “pandemic stock” – that label doesn’t give it credit for its impressive pre-pandemic growth.

However, it is fair to say that the pandemic has been a major catalyst for the adoption of Zoom.

In the fiscal year ending January 2021, the company’s revenue was up 326% year over year, to nearly $2.7 billion.

Bears argue that Zoom will lose its job as the world beats the coronavirus.

And even the bulls admit that Zoom’s growth rate is slowing, which is understandable.

During the first three quarters of fiscal year 2022 (the current fiscal year),

the company’s revenue increased by 71% compared to the corresponding period last year.

However, third-quarter revenue was only up 35% year over year, which is indicative of the rapid decline in the growth rate.

However, Zoom is a profitable company, with positive free cash flow, and has a fortress of the balance sheet.

And by these three metrics, Zoom’s stock has never been cheaper.

 

Zoom continues to grow

Remote work is unlikely to disappear, which is why investors expect companies to continue subscribing to Zoom services.

A September 2021 Gallup poll found that 45% of the American workforce still works from home at least some of the time.

The majority of those surveyed said they wanted to continue working from home.

Upwork has also done a study, It found that 28% of American workers will be working remotely full time by 2025,
a much larger number than it was before the pandemic began.

Companies will need a solution to be able to manage their workforce remotely, and so it is likely that they will continue to pay for their Zoom subscriptions.

This is why Zoom will be a premium stock in 2022 and will keep the business it already owns.

 

Zoom Products

Who has not used Zoom Meetings? This product is a video conferencing management tool.

But it’s not the only product the company has, it also has software – Zoom Phone and Zoom Rooms – which represent even greater opportunities in the long run.

At Zoom Analysts Day in September, management presented two case studies.

Two clients began fiscal year 2019 with initial purchases of Zoom Meetings and Zoom Rooms.

Just three years later, these two customers increased their spending with Zoom by 470% and 500% by increasing meeting and room licenses, as well as purchasing the Zoom Phone. 

We realize that these two case studies are probably the best case scenario.

But it does show growth potential nonetheless.

As of September, only 4% and 5% of Zoom customers have purchased Zoom Phone and Zoom Rooms,
which presents great opportunities to sell, not to mention gain new customers. 

Supposing workers will increasingly return to the office, as many expect, this is the perfect time to upgrade physical office space.

Zoom Phone updates the internal phone infrastructure while Zoom Rooms updates conference rooms

. It may not make sense to spend money on these upgrades when your workforce is far away.

But with employees back in the office, it makes a lot of sense.

 

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