As the company used public cloud infrastructure to face the phenomenal demand for its communication services, adjusted gross margin dropped to 72.3%, down from 82.2% in the prior-year quarter. Equipped with its 15-year experience as a former IT engineer, Herve covers the tech sector. Zoom's share price now trades at 53 times the midpoint of the forecast full-year revenue guidance range and 185 times the midpoint of the full-year adjusted earnings per share guidance range. As the company used public cloud infrastructure to face the phenomenal demand for its communication services, adjusted gross margin dropped to 72.3%, down from 82.2% in the prior-year quarter. Returns as of 10/17/2020. The company's IPO was in April 2019, at $36 a share. The stock … In addition, management raised its full-year guidance substantially despite claiming a conservative approach. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. As a result, management upgraded its full-year guidance in a meaningful way to reflect this new reality. It’s not just Costco, either. Net income reached $185.7 million, up from $5.5 million one year ago. Yet that doesn't mean it's an attractive investment. When he's not busy writing about cybersecurity, cloud computing, and other fascinating technologies, he enjoys running and traveling. That’s why I recommended COST stock earlier this month. View which stocks have been most impacted by COVID-19. quotes delayed at least 15 minutes, all others at least 20 minutes. We are maintaining our fair value estimate of $52 and no-moat rating,” wrote Morningstar analyst, Dan Romanoff. Zoom's huge success brought extra scrutiny to its security and privacy issues, though. Matt does not directly own the aforementioned securities. While both companies are growing revenues more slowly — LogMeIn (64.3% average annual growth in the last three years) and RingCentral (31.5%) — Zoom’s valuation still appears high compared to its more than 100% growth. » View our list: The best-performing stocks. In 2019, Zoom facilitated more than 5 billion monthly meeting minutes — and that number may grow exponentially now that working from home is the norm in 2020. MOUNTAIN VIEW, CALIFORNIA - NOVEMBER 03: Eric Yuan attends the 2020 Breakthrough Prize Ceremony at ... [+] NASA Ames Research Center on November 03, 2019 in Mountain View, California. You’ll get the name & ticker of Matt McCall’s top pick when you tune in to his FREE event. But that may lead to more profit-taking in ZM stock and a lower price. NerdWallet's ratings are determined by our editorial team. Morningstar is certainly right that Zoom’s valuation is high. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities. After a phenomenal fiscal first quarter, Zoom kept profiting from the coronavirus-induced accelerated shift to remote work during its fiscal second quarter, ended July 31. Click here to see what Matt has up his sleeve now. Here is some information to help you decide. But, like Zoom Video, Costco gets a long-term benefit as well. Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Zoom Video Communications Inc Founded in 2011, Zoom is headquartered in San Jose, California. However, this does not influence our evaluations. Paid subscription thereafter, see Morningstar.com for details. But does its stock belong in your portfolio? Take a look at Costco Wholesale (NASDAQ:COST). Dayana Yochim is a former NerdWallet authority on retirement and investing. With such a challenging risk-reward situation, investors should stay on the sidelines. What Is a Brokerage Account and How Do I Open One? I’ve argued for weeks that this crisis, as tragic as it is, will pass. Cumulative Growth of a $10,000 Investment in Stock Advisor, Is Zoom Video Communications Stock a Buy? You can use a brokerage account to buy investments. … [One new customer —] USPS, is starting to deploy Zoom Meetings more broadly across the organization after an extensive proof-of-concept,” according to Zoom’s December 5 earnings conference call transcript. What helps the case for ZM stock here is that the company isn’t just getting a short-term boost to usage. , which walks you through the process of placing an order. 2020 InvestorPlace Media, LLC. Alphabet’s (NASDAQ:GOOG,NASDAQ:GOOGL) Google Hangouts appears to have relatively small share. Net income reached $185.7 million, up from $5.5 million one year ago. CEO Eric Yuan expressed his intention of bringing the company's security to the highest standards, which is a necessary step to protect users and the reputation of the business. Article printed from InvestorPlace Media, https://investorplace.com/2020/03/zm-stock-buy-settles-down/. Zoom for Home: a software and hardware offering that is also now available on devices from. Unlike a lot of high-multiple growth companies, Zoom is profitable as well. It now expects full-year revenue to land in the range of $2.37 billion to $2.39 billion, compared to the previous range of $905 million to $915 million in March. Equipped with its 15-year experience as a former IT engineer, Herve covers the tech sector. After reporting earnings on December 5, the stock — which soared 45% to peak at $105 on July 31 — lost nearly 10% of its value between its earnings report and the market close on December 6. In the latest fiscal year it brought in more than $7.5 million in profits, thanks in part to marquee companies like Microsoft, Google, Salesforce, Altlassian and Dropbox integrating Zoom’s technology into their platforms. Investors just don’t seem to care about valuation as much as whether a company beats quarterly expectations and raises guidance every quarter. Property and Casualty insurance services offered through NerdWallet Insurance Services, Inc.: Licenses, NerdWallet Compare, Inc. NMLS ID# 1617539, NMLS Consumer AccessLicenses and Disclosures, California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812, We want to hear from you and encourage a lively discussion among our users. Our opinions are our own. Zoom Video Communications (NASDAQ:ZM) posted another exceptional quarter that smashed analysts' expectations and management's guidance. For more details, see this piece on. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. And Zoom’s net promoter score — a measure of how willing customers are to recommend the company — remained above 70, according to CFO Kelly Steckelberg’s comments on the conference call transcript. And the company also attracted many new customers: The number of customers with more than 10 employees increased to 265,000, up 354% year over year. To use the growth framework I developed in Disciplined Growth Strategies, Zoom is growing profitably along four dimensions: new customers, a new internally developed product, expansion into new geographies, and a culture of customer happiness. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Free cash flow jumped from $17.1 million one year ago to $373.4 million. ZM stock, however, is not going to crash. However, extra security could reduce the ease of use of its software -- an important competitive advantage for Zoom. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Read on to find out how to evaluate and buy Zoom stock. That giant never has been able to drive consistent growth in Skype for Business. In addition to the launch of its cloud phone system, Zoom Phone, at the end of 2018, the company announced this quarter two offerings that will facilitate the consumption of its communication services: Given these better-than-expected second-quarter results, management again raised the guidance it had already meaningfully raised during the previous quarter. Here are four reasons: Analysts Like Zoom’s Growth Strategy — But Valuation Is High. *Paid subscription thereafter, see Morningstar.com for details. They are not intended to provide investment advice. (Photo by Taylor Hill/Getty Images), EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, December 5 earnings conference call transcript. Nasdaq But many of those stocks are biotechnology or pharmaceutical companies developing coronavirus treatments. EPS = earnings per share. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Revenue more than quadrupled year over year to $663.5 million. A brokerage account is an investment account you open with a brokerage firm. Let's conquer your financial goals together...faster. Given that, is Zoom stock still a buy? Many short sellers could be benefiting. Yuan emphasized Zoom’s growth from new customers and its powerful culture. And Zoom's revenue growth remains constrained by its total addressable market. This comes to mind in considering San Jose, Calif.-based Zoom Video Communications — of which a whopping 41% of its shares were sold short as of … Even with that large scope that takes into account contact center solutions that Zoom doesn't offer, Zoom's market cap above $120 billion suggests the company will dominate that unified communications market over the long term. Market data powered by FactSet and Web Financial Group. You’re likely going to choose between a market order (“buy this stock right now at the prevailing market price”) or a limit order (“buy this stock only if it’s available at the price I’ve specified”).
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