What Is Zoom’s Long-Term Growth Trajectory?

What Is Zoom's Long-Term Growth Trajectory?

With ample cash flow from operations, Zoom ( NASDAQ:ZM ) currently has the ability to try new technologies and new ways to improve its overall solutions. In this Motley Fool Live segment from “The Virtual Opportunities Show,” recorded on March 1 , Fool.com contributors Travis Hoium, Rachel Warren, Jose Najarro, and Demitri Kalogeropoulos discuss how this and other factors could affect Zoom’s stock over the long term. Video Player is loading. Play Video



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This is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button. Should you invest $1,000 in Zoom Video Communications right now? Before you consider Zoom Video Communications, you’ll want to hear this.Our award-winning analyst team just revealed what they believe are the 10 best stocks for investors to buy right now… and Zoom Video Communications wasn’t one of them.The online investing service they’ve run for nearly two decades, Motley Fool Stock Advisor , has beaten the stock market by over 4X.* And right now, they think there are 10 stocks that are better buys. *Stock Advisor returns as of March 3, 2022 Travis Hoium: Zoom reported an earnings. Stock is down about 5 percent literally 5 percent today in trading. Interesting report from them. Zoom is one of these companies that I don’t know exactly what to think about coming out of the pandemic. I think we’re seeing this with a lot of growth stocks and I was like, did really well during 2020 and 2021. We’ve talked about pulling forward business. If you’re going to average growth of 15 percent a year and you pull a bunch of that forward. Where you’re going to end up doing is, you’re going to have extremely high growth for a short period of time and then it’s going to fall off. Your growth rate is going to fall off. But you don’t know how long that falloff is going to happen and when are you going to get to a more normal growth rate. That’s what we’re seeing with Zoom right now.Fourth-quarter revenue, $1.07 billion up 21 percent from a year-ago, and for the full-year revenue is up 55 percent to 4.1 billion. Those numbers sound great. Q1 guidance for this fiscal year. Basically flat revenue, sequentially. Flat from the fourth quarter to the first quarter. For the full year, they’re expecting basically 4.5 billion, so up around 10 percent for the year. This is a company they’re expecting earnings of $3.45 to $3.51 so at the high end of that, you’re talking about a stock trading at 36 times earnings. Now, if this is a company growing at 55 percent per year, that’s a really cheap price to pay for a stock growing that fast. If this is a stock that’s growing zero percent per year, that’s a lot to pay for a stock like that. Zoom is somewhere in the middle, but I don’t know where it is in the middle of that range.I think that what’s a little bit tough for everybody to decipher as we look at our earnings right now is what is the long-term growth rate for a company like Zoom, especially as everybody gets into video conferencing, whether it’s Microsoft Teams or Google Meet, any of these larger platforms. Is Zoom going to be able to compete long term. Yes, I know if you guys had a chance to look at the numbers a little bit, but I’ve been curious about your thoughts on what the future of Zoom is, is it the trough in growth going to continue or where are we headed? Rachel Warren: I can jump in. I really like this company, and I’m an investor. It’s been a bumpy ride in recent months to put it mildly. But I haven’t had a chance to look too deeply. I think what you mentioned about what is that long term growth going to look like? I think the company can study. I think it has a lot of strong potential, but I do think a lot of the volatility we’ve been seeing […]

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