Where Will Zoom Video Communications Be in 5 Years? | The Motley Fool.COVID (coronavirus) information for business | ACCC

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Learn More. Zoom 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 Crowdstrike , and DarkTower, and beefing up its infrastructure via a 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 plenty of room for Zoom and its rivals to grow without trampling each other. 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 too high relative to Zoom’s growth, and could deflate if its growth decelerates, it loses users to rival platforms, or it stumbles over new security and privacy issues.

Zoom’s second major issue is trust. It falsely claimed its platform offered end-to-end encryption, which wasn’t true because its own employees could still access the video streams.

It also quietly revised its “daily active user” count to “daily active participants,” since the 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 security flaws — which include routing streams through Chinese servers, failing to block attacks on video conferences, and phishing scams — have already tarnished its brand. Several countries — including the U.

Big companies like Google and Space X have also ordered their employees to stop using Zoom. That list will 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.

Zoom 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 to 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 since inception of the Stock Advisor service in February of Discounted offers are only available to new members.

Calculated by Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Premium Services.

Stock Advisor. View Our Services. Our Purpose:. Latest Stock Picks. Today’s Change. Current Price. This Wall Street darling is trading at bubbly valuations — and it faces a growing number of challenging headwinds.

Image source: Zoom. Zoom Video Communications. Motley Fool Returns Market-beating stocks from our award-winning service. Stock Advisor Returns. Join Stock Advisor. Our Most Popular Articles. Get Started Now. View Premium Services.

 
 

 

Zoom stock price forecast 2025 – none:.Where Will Zoom Video Communications Be in 5 Years?

 

Edited by Alexandra Pankratyeva. Zoom has been used extensively during the Covid pandemic. Will Zoom stock overcome this recent downturn? Zoom Video Communications was founded in by Eric Yuan, who remains its chairman and chief executive. The video conference platform attracted one million users by Based in San Jose, California, the company went public in April On 31 August, Zoom stock fell On 23 November, Zoom saw its second worst day of the year as stock prices dropped Eventually, the multi-billion-dollar merger was mutually terminated by Five9 and Zoom.

Zoom investors also face the risk from increasing competition. On 2 December, software giant Microsoft introduced a new low-cost tier of its Teams communication service for small businesses.

However, Zoom bulls view the recent downturn as a buying opportunity. Third quarter revenue posted a 2. According to Reuters , as of 6 December, Zoom stocks scored a mean rating of 2. Past performance is no guarantee of future results. Always remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money.

And you should never invest more than you can afford to lose. Zoom faces questions about its ability to deliver growth as pandemic-related tailwinds begin to wane for its stay-at-home video conferencing solutions. There are no guarantees. Markets are volatile. You should conduct your own ZM stock analysis, taking in such things as the environment in which it trades and your risk tolerance. And never invest money that you cannot afford to lose.

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Partner with us. Partnership Programme. Support center. Capital System status. Get the app. Log In Trade Now. My account. Zoom ZM stock forecast: Bargain opportunity or slippery slope? Share this article Tweet Share Post. Have a confidential tip for our reporters? Get In Touch. The origins of Zoom Zoom Video Communications was founded in by Eric Yuan, who remains its chairman and chief executive.

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