Zoom Stock Extends Fall Amid Fears Growth Could Be Worse Than Advertised | Barron’s – Key Points
Stock Price Forecast The 25 analysts offering month price forecasts for Zoom Video Communications Inc have a median target of , with a high estimate. Management is expecting non-GAAP earnings per share (EPS) of $ for the entire year, a nearly % increase over the prior year. This. Thus far in , ZM stock has retreated about 41% amid volatility in the tech-heavy Nasdaq composite. The Nasdaq composite popped % the week.
Will Zoom Stock Keep Falling in ? | The Motley Fool – Forecasting
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All three major indexes finished the week lower. Markets closed. Dow 30 32, Nasdaq 12, Russell 1, Crude Oil Gold 1, Silver Vix CMC Crypto FTSE 7, Nikkei 27, Read full article. More content below. Henry Khederian. Zoom Video Communications Inc. ZM , which offers a video-first communications platform, saw its popularity soar during the past two years amid the COVID pandemic.
Earnings and revenue skyrocketed. But the company’s growth has decelerated sharply in recent quarters as employees have begun to return to their offices. In this new environment, Zoom’s biggest challenge is how to retain its base of large corporate customers, who are crucial to producing a steady, reliable revenue stream. Investors will be watching closely at how Zoom management plans to address these challenges when the company reports earnings on May 23, for Q1 FY The company’s fiscal year FY ended Jan.
Analysts are not optimistic. They expect Zoom’s quarterly adjusted earnings per share EPS to decline for the first time in several years as revenue growth continues to slow. This key metric provides an indication of the number of larger enterprises utilizing Zoom’s platform. These customers provide more stable, longer-term revenue streams than smaller customers. Shares of Zoom have underperformed the broader market over the past year.
The stock outperformed through the first three months of the year. But it sank after the company reported fiscal Q2 earnings in late August and it has underperformed ever since.
Zoom’s shares have provided a total return of Zoom reported Q4 FY earnings results that beat analysts’ expectations. Adjusted EPS rose 5. Revenue grew Revenue growth was driven by the company’s acquisition of new customers as well as the expansion of services across its existing customers.
In Q3 FY , Zoom’s earnings and revenue beat consensus estimates. Adjusted EPS increased Revenue expanded The company said that revenue growth was driven by the acquisition of new customers and the expansion of services across its existing customers. Analysts expect Zoom’s financial performance to deteriorate dramatically in Q1 FY They forecast the company’s adjusted EPS to fall Revenue is expected to grow Annual revenue is expected to rise The size of this customer group provides a measure of two key capabilities: Zoom’s ability to scale its offerings to its users’ needs, and the company’s ability to attract larger organizations to its platform.
Large customers are likely to be a more stable source of revenue compared to individuals or smaller organizations who may switch more frequently to other video conferencing services.
Securing contracts with large enterprises will be especially important as the global economy continues to emerge from the worst effects of the pandemic and as many people begin returning to their company offices to work. It will also be important to secure those big-revenue-generating customers as competition with other video-communication platforms heats up. By the end of FY , the company had such customers.
That total has expanded to 2, as of the end of FY , which ended in January. That’s a nearly eightfold increase in just three years. While growth accelerated all the way through FY to the first quarter of FY , it has been decelerating ever since. The number of large-contract customers rose
Zoom stock prediction 2022 – zoom stock prediction 2022:
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Or will this falling knife again find an upward trajectory? Here is what you need to know. Both users and investors flocked to Zoom in With lockdowns in full force, people “Zoomed” with friends and family, students Zoomed for school, and businesses Zoomed with clients.
The world definitely took on a digital focus. Despite this blistering revenue growth, the stock price somehow outran it. The stock’s price-to-sales ratio shot as high as , making Zoom one of the most expensive stocks on the market at the time. ZM data by YCharts. It only makes sense that as pandemic lockdowns eased and Zoom’s temporary surge in growth faded, investors would begin to cool on the stock.
The stock price decline has been steep, possibly pushed lower by a broader market sell-off among growth stocks in But just because Zoom couldn’t maintain its triple-digit growth rate, it doesn’t mean the company isn’t still thriving.
In the third quarter of fiscal ending Oct. Zoom Phone, which is the company’s new unified communications app , is helping drive this spending. Management reported in Q3 that Zoom Phone saw triple-digit percentage revenue growth year over year. A growing company like Zoom is often unprofitable, but Zoom has strong financials already.
This shows that Zoom’s profitability is accelerating as revenue is now outrunning the company’s costs. The stock market can be irrational and stock traders are prone to overreact to things. Zoom’s stock was definitely overpriced at its peak, but the momentum has swung so far the other way that the stock is now arguably a bargain.
The stock price has now fallen to pre-COVID valuation levels, despite the business’s continued growth. Its price-to-earnings ratio of 34 is less than that of a consumer goods company like Nike , despite growing EPS at a triple-digit percentage rate.
It’s becoming harder to ignore Zoom based on the current valuation and substantial numbers it’s put up. If there is a worry for investors, it’s probably competition with Microsoft. Microsoft is much larger than Zoom, making it a formidable competitor with deep pockets. Zoom, of course, competes with Microsoft Teams , which is a crucial cog in Microsoft’s grip on the enterprise market.
Investors will want to monitor Zoom’s revenue growth and management’s comments on customer account growth to ensure that Zoom competes well. I think that there’s room for more than one winner in such a large market, but if Zoom starts losing so much business that its growth begins declining, investors might reconsider their stance on the stock. 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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