Revenues grow at a 25%+ compounded annual growth rate to ~$10 billion by 2030.The company adds roughly 50,000 to 75,000 new customers per year into 2030 (versus a cadence of ~30,000 before the pandemic), leading to just over 1 million total customers by 2030 (out of an addressable market of over 3 million total businesses in developed economies).Huge long-term profit growth is already priced into Zoom stock. Profits will soar doubly.Īll of that means ZM stock should head way higher in the long run, right? Overpriced ZM Stock The highly scalable software business model with big gross margins will drive significant operating margin expansion. As it does, Zoom will see its customer base grow from less than 300,00 today to potentially a million or more by the end of the decade. Over that stretch, Zoom likely maintain leadership in the market through its singular focus on enterprise video solutions. Thus, video teleconferencing software seems well on its way toward reaching ubiquity over the next five to 10 years. That’s because the internet has enabled an entirely new era of work, wherein high levels of productivity can be achieved without needing to pay huge office and travel expenses. But office virtualization tailwinds will stick around long after the pandemic passes. Sure, the Covid-19 pandemic won’t last forever. In the first quarter, the number of Zoom customers rose 354% year-over-year and revenues rose 169%. 8 Presidential Election Stocks to Buy in Case Trump Wins Again.In this space, Zoom consistently provides the highest quality video stream, and has therefore become the gold standard across enterprises. Naturally, then, demand for video teleconferencing software has surged amid the Covid-19 pandemic. And people like to see each other when conducting business, especially for big meetings. It’s tough to argue against Zoom’s fundamentals. Valuation friction will rear its ugly head. While it may seem like ZM stock will simply go up forever, it won’t. All of that big growth is already priced in.Īs such, I wouldn’t chase the rally here. Every trend in the world favors big growth at this company for a lot longer. This rally is overdone. Yes, Zoom is on fire.
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