Friday, September 30

Zoom and its parallel reality in the market

Zoom, the video calling platform that suddenly became part of the daily lives of millions of professionals during the pandemic, introduced some results for the third quarter that beat analysts’ expectations. But he saw how the market was suspicious of his future, correcting his valuation by 3.16 percent.

The fall of Zoom up to 242 dollars (215 euros) during Monday’s session was preceded by falls of 1.11 percent on Friday, and another of 3.45 percent on Thursday.

The value listed on the Nasdaq it has lost up to 32 percent so far this year, and although analysts maintain target prices above their current value, the market is not so clear.

Zoom presents strong financial results and collects good forecasts

The company run by Eric Yuan increased its turnover by 35 percent year-on-year to $ 1,050 million (932 million euros) between July and September 2021, an increase that translated into a net profit of $ 340 million, or $ 1.11 per share.

During the same period last year, the company reaped $ 198 million in profits, which reported $ 0.66 per share. The CEO of the video calling platform, in addition, assured that the company would close 2021 with a total turnover between 4,079 and 4,081 million dollars, which would mean a growth of 54 percent year on year.

In the eyes of analysts, these figures could be used to dispel doubts about the use of Zoom following the return to the office of many companies, and would cement his view that stocks will perform well because of their steep second-quarter stock market decline, which reached 24 percent.

That is the premise that they launched from Mizuho Securities in his forecast report for the company, and it seems a thesis shared by many of his colleagues in other entities, who have updated their recommendations while maintaining their positive opinion on the attractiveness of the company.

Matthew Niknam of Deutsche Bank, is one of the most cautious experts regarding the platform, and recommended to retain the value, assigning it a price target of 280 dollars, 38 dollars above its current value.

From Morgan Stanley, JP Morgan, Baird y RBC Capital, instead, they are more optimistic, issuing overweight advice on a stock to which they assign target prices ranging between $ 300 and $ 450.

At its peak, which came in October 2020, Zoom It was worth $ 559, a valuation that now seems impossible, having fallen almost 50 percent since then.

Why is the company mistrusted then?

Matthew Martino, from Bloomberg Intelligence, he explained in his analysis on Zoom that the announced purchase of Five9 for 12.47 billion euros would have helped the company led by Yuan to continue increasing its uptake of users during the next five years, which until now had been “one of the best in the sector”.

Five9 is specialized in the cloud services segment, a market niche in which the group wanted to compete with giants such as Amazon Connect, in addition to Google o Facebook.

The problem is that Zoom y Five9 they broke that fusion plan last september, and even though Zoom He then assured that he would launch his own cloud service, Martino He considered in his analysis that the company will have to acquire or merge with a company to continue its profit rate.

“The termination of the agreement with Five9 Zoom’s billing growth forecast for next year is likely to cloud, as we believe that the reach to customers with 10 or fewer employees may have worsened in the third quarter, given the faster reopening of the economy, “says Martino.

That is Zoom It grew so fast during the pandemic that its current pace seems insufficient in the eyes of investors, despite the good results it continues to reap and the forecasts that its health will not deteriorate in the short term.