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Zoom share price decline steepens as revenue growth shrinks | S&P Global Market Intelligence – Here’s how these Fools think about a post-earnings dip. Click here to ENTER
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Learn More. Capable video-conferencing software became an absolute necessity for businesses overnight, and the path of least resistance was Zoom’s easy-to-start and easy-to-use product. Zoom’s revenue soared as businesses scrambled to enable employees to work from home.
Even though Zoom’s financial results continued to impress through much of , the stock has been steadily declining for the past year. The stock market is forward looking. It’s clear that investors have been worried about what will happen to Zoom once the pandemic is over, and that worry has contributed to the stock’s decline.
The video-conferencing software market isn’t going away, and the pandemic almost certainly accelerated adoption of the technology. But the end of the pandemic represents a sea change for Zoom. In the first months of the pandemic, businesses that abruptly found themselves with remote employees had no choice but to pay for video-conferencing software. It didn’t matter how much it cost; what mattered was getting up and running quickly. There are plenty of video-conferencing options, but many of them are geared toward larger enterprises or tied to legacy systems.
If a company was already a Cisco customer, using WebEx made sense. For many companies, though, Zoom was the obvious choice. Even though the pandemic isn’t over, the environment today is very different. Companies that absolutely needed to adopt Zoom’s software have already done so. Some of those companies are starting to bring workers back to the office. While remote work will probably be more prevalent in the post-pandemic world than in the past, plenty of workers will no longer be using Zoom as often.
Companies that frantically adopted Zoom last year can now take a breath and decide whether it’s the best solution. The urgency is gone. Zoom is starting to see smaller customers drop off the platform , and enterprise customers are taking more time to make buying decisions.
The bonanza is over. Zoom expects to report lower revenue in its third quarter than it reported in its second quarter. It’s possible that Zoom’s revenue will eventually start to decline on a year-over-year basis as its customers adjust to the post-pandemic world.
The company is already seeing some of its pandemic-era growth start to unwind. Where the post-pandemic baseline for Zoom ends up settling is anyone’s guess. The all-stock deal was attractive for Five9 shareholders at the time of the offer, but not so much once Zoom’s stock tanked. It will be difficult for Zoom to make any major acquisitions using its stock as currency after the Five9 deal collapsed.
The time for that was probably last year when the stock was soaring and confidence that it would keep soaring was high. The window of opportunity for Zoom to use its inflated stock to diversify via acquisitions appears to be closed. Zoom stock is expensive based on its full-year guidance, but it’s not that expensive.
That guidance represents a price-to-sales ratio of about 19 and a price-to-earnings ratio of about Expensive, yes, but not crazy for a fast-growing company.
If Zoom stops being a fast-growing company — which looks like will probably be the case at least for a while as the pandemic ends — all bets are off.
Will investors be willing to pay nearly 20 times sales for a software company that isn’t growing much? While Zoom is producing hefty profits today, that may not remain the case. If large numbers of businesses are essentially forced to pay for your software, of course you’re going to be extremely profitable.
As the pandemic ends, so does the absolute necessity of Zoom. None of this is to say that Zoom is a bad company. Its product is easy to use and would have probably disrupted the video-conferencing market, even without a global pandemic. But the stock is pricing in a lot of growth, and it doesn’t look like Zoom will be able to deliver. As growth grinds to a halt and margins slump, Zoom stock could fall off another cliff as investors reevaluate the pandemic darling.
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Stock Advisor. View Our Services. Our Purpose:. Latest Stock Picks. Key Points. The company’s acquisition of Five9 fell apart, throwing a wrench in its plan to diversify revenue.
Zoom stock has already been cut in half but could keep falling as growth halts and profits sink. Today’s Change.
Current Price. The pandemic darling has been tumbling for a year, and there could be more pain to come for shareholders. Image source: Getty Images. 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.
Why is zoom stock dropping 2021 – none:.Zoom stock just crashed — here’s the simplest reason why
Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resourcesand more.
Learn More. They dig into the earnings report from Zoom ZM They’ve got news on a new partnership in the retail space. They also answer a listener’s question about creating a new basket of stocks.
Finally, Bill is pitching a Christmas movie idea to Chris, and much more. To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video. Chris Hill: It’s Tuesday, December 1st. Welcome to MarketFoolery.
I’m Chris Hill, with me today, Mr. Bill Barker. Good to see you. Hill: We’ve got retail news, we’ve got a question about the next potential war on something, and I’m rdopping talking about, you know, global wars, I’m talking about, you know, like the War on Cash, that kind of thing. Bill has a Christmas movie 202 pitch me. Why is zoom stock dropping 2021 – none: me say upfront, that’s going to be in the second half of the show, we’re going to try and keep droppung to the second half of the show.
So, let’s jump right in with Zoom Video. Third quarter results for Zoom Video were better than expected. Guidance for the fourth quarter was not what Wall Street wanted to hear.
Barker: Yeah, far from a death knell, I would say. I think zokm basically confirmation that the floor underneath this stock is very, very, very secure or the floor under the company. The ceiling gets reduced as, you know, the vaccine news comes in better. There’s droppijg a lot of that lately. And that puts a little bit of a cap on the very near-term story of Zoom. And if people get to go back to their old lives, either eventually or sooner than eventually, that takes a little bit of the helium 20021 of the Zoom stock, but, you know, [laughs] it’s still a pretty richly valued stock.
Now, some of the guidance is a little bit cautious forbecause Zoom, like the rest of us, doesn’t really know what’s going to happen. And so, the massive, rapid, profitable adoption of Zoom across so many industries and so many people is great, but will everybody stick around when they have the option not to. And Zoom doesn’t yet know, it’s optimistic that it’s providing a service that’s going to be entrenched in people’s and businesses’ lives to a great degree, but it can’t make those promises.
I think that the company is known for exceeding why is zoom stock dropping 2021 – none:, and the guidance that it provides. As you point out, the guidance is more conservative than Wall Street was maybe hoping for.
So really, there is some inflated, you know, price earnings multiple on top of the really unbelievable growth. But, you know, it could get cut-in-half again from here, sure, but it would still quadruple, triple what it was last year.
This is similar to the recent partnership between Target and Ulta Beauty. Sephora is going to open hundreds of small stovk shops inside Kohl’s stores. They’re aiming for by next Fall and more than by That’s ambitious, but 0221 also seems like a smart move by Kohl’s.
Barker: This is a smart move by Kohl’s. Sephora is getting out of J. And I would say what this does is, we talk sometimes floors-and-ceilings, I mean, Kohl’s was exploring what the floor was for its business back in March. So, it still had a bad year as a stock, even though why is zoom stock dropping 2021 – none: more than tripled in that time period.
And if Sephora were the cure-all for a retailer’s woes then J. Penney would wny be thriving, right? It’s leaving intelligently, as far as picking up and taking its business away from J. Penney and going into Kohl’s, but Sephora is not on its own going to be any more able to make Kohl’s a hot retail opportunity none:: it was able to do so for J. Nevertheless, Kohl’s is a better why is zoom stock dropping 2021 – none: than J. Penney, certainly hasn’t gone through quite the disruptions that J.
Penney has, but you know, keep in mind, this is more shoring up the floor than exploring the ceiling. Hill: No. But it’s absolutely something they need to do.
And it reminded me a little bit of the partnership they struck with AmazonI’m talking about Kohl’s, of course, to provide returns within Kohl’s locations. This gives people one more reason to actually go into a Kohl’s. Kohl’s does curbside pickup, I don’t see them promoting it in the same way that we’ve seen Target and Walmartbut those two businesses have certainly provided a blueprint for what Kohl’s could be in the future.
I don’t know. I’m not buying shares of Kohl’s, but I don’t think it’s unreasonable that the stock is up today in the way that it is. So, even though it was losing on the margins, it was buying back shares and keeping that earnings per share story reasonably consistent.
It’s not going to suffer quite as much as your J. Penney, Searshighly mall-based stores like this, but it’s still an uphill battle against Amazon.
It’s improved the online experience, but it’s got a long way to go. Hill: Our email address is MarketFoolery Fool. Question from Sean Bryan in Harrisville, Utah, who writes, “I think there may come a time when people will look back and wonder how we justified eating animal meat, at least in stoc, amounts that we do now?
If the War on Cash is followed by a “War on Meat,” what are the first three stocks you would put in that basket? It’s an interesting thought exercise, the obvious first stock is probably Beyond Meatand if Impossible Foods goes public, they’re in there as well. Barker: Yeah, I guess it would depend, you atock, if the war is being waged against the meat processors, right.
You want to stay pretty far away from Smithfield, for instance, which is now owned by China. But I think, obviously the Beyond Meats of the world are where you would, kind of, start with that. Is poultry being taken out too in this example? By the way, I’m totally willing to entertain the notion that meat consumption is going to suffer as people become, one, they’ve got more opportunities to источник статьи a meat-like taste from the Beyond Meats, but, you know, an increased exposure to the story of factory farms and things like that, I could certainly see society turning its back and looking back on our generation and how much meat we eat and how we produce it as being something that is fairly horrifying to the future generations.
Hill: Well, to answer your question, Sean writes “eating animal meat,” chickens are animals, so, yeah, I guess [laughs] poultry is part of that as well. Barker: Yeah. Whereas poultry often, and has picked up from peoples moving away for purely health reasons, away from red meat, boy! Barker: Yeah, I do think these are why is zoom stock dropping 2021 – none: that need to be considered.
And I think Tyson Foods is one of those things that I wouldn’t put all of my money into or Hormel or any of those. Hill: I also think it’s a trend that needs to be considered, I don’t think, for investors, this is as lucrative a trend, both, in the near-term or even in the long-term, as the War on Cash. And likely to be a much bloodier war too.
I mean, beef and the production of it are about as central to the iconography of the American experience as you can get. If you’re like me, the fact that you have never driven a herd of cattle to the slaughterhouse, it’s probably something that you ozom a failure at a certain level, as an American man. Don’t you feel at some level, like, you’re supposed to have done that by now? It may not be a level you could even put words into; I see you struggling, but you know what I’m talking about.
Hill: I think you’re talking about the movie City Slickerswhich is the only passing thought I ever had of like, По этому адресу wonder what that would be like. And then by the end of the movie, I thought, well, that was a fun movie, but, droppibg, I’m not interested why is zoom stock dropping 2021 – none: doing that. Barker: No, no, no, not as a vacation, as a, you know, you’ve got to do this or the ranch is going to have to be sold, like this level of being tied to the land and the animals and the production of your own food and all that, in a way that — look, you’re a big movie fan, you’ve watched your fair share of westerns, I mean, I’m not talking City Slickers level.
Hill: Yeah, my fair share of westerns is probably smaller than other people’s fair share of westerns. Barker: But you know, that this is laced into the American psyche. And if you’re going to take beef away, boy! Hill: Well! And to go back to the War on Cash, how much resistance is cash putting up? Is why is zoom stock dropping 2021 – none: U. Treasury [laughs] really Treasury Department?
I’m going to say, no. Whereas to your point, yeah, the beef industry, the poultry industry, yeah, they’re going to put up a why is zoom stock dropping 2021 – none:.
Droppng Great commercial. And the fact that you onne: them voiced by people like Sam Elliott and Robert Mitchum, I mean, two of the all-time great whhy. So, yeah, those are — you know, again, [laughs] the U. Treasury Department is not running second commercials on television or second pre-roll ads on YouTube to be, like, “Cash.
It’s What’s In Your Wallet” like, no, they’re not doing that. Barker: Right.
How Much Further Could Zoom Stock Fall? | The Motley Fool.Why Zoom Shares Are Falling
It’s also true that companies that announce their intentions to split their stock tend to see their share prices run up as the split date approaches. All this buying can drive share prices up, bringing in more momentum traders and adding fuel to the fire. Energy prices are soaring. But bargain-hunter Buffett continues to bet on big oil.
Over the past year and a half, the Biden Administration has shown a consistent policy bent toward the promotion of electric vehicles EVs. This has given EV manufacturers openings for new contracts with Federal, state, and local level government agencies. More importantly, the Administration has publicly backed Federal funding for a massive build-out of EV charging infrastructure.
This provides a real opening for investors. The modern EV industry is young, and provides investors with an array o. Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, , we zero in on three names. While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names.
Snap Inc. CPI inflation data is out on Friday. The e-commerce platform just inked a deal to purchase a fulfilment technology provider to further grow its business.
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Stocks fell last week, but was it constructive? Tesla tumbled on Elon Musk’s “super bad” warning. Apple WWDC is due. From buying groceries to gasoline to automobiles, inflation has hammered Americans’ purchasing power. In fact, the most well-known metric of inflation has soared to a four-decade high. Pfizer plans to submit the data as part of its ongoing rolling submission to the U. Zoom Video Communications provides a communications platform that connects people through video, voice, chat, and content sharing.
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A healthy stream of income awaits. It’s certainly understandable; getting more shares of your favorite company can bring a smile to the faces of even the most stoic among us. It’s also true that companies that announce their intentions to split their stock tend to see their share prices run up as the split date approaches.
All this buying can drive share prices up, bringing in more momentum traders and adding fuel to the fire. Over the past year and a half, the Biden Administration has shown a consistent policy bent toward the promotion of electric vehicles EVs. This has given EV manufacturers openings for new contracts with Federal, state, and local level government agencies.
More importantly, the Administration has publicly backed Federal funding for a massive build-out of EV charging infrastructure. This provides a real opening for investors. The modern EV industry is young, and provides investors with an array o. Energy prices are soaring. But bargain-hunter Buffett continues to bet on big oil. Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, , we zero in on three names.
Zoom is a space where you can connect to others, share ideas, make plans, and build toward a future limited only by your imagination. Our frictionless communications platform is the only one that started with video as its foundation, and we have set the standard for innovation ever since.
That is why we are an intuitive, scalable, and secure choice for large enterprises, small businesses, and individuals alike. Visit zoom. Zoom assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.
Zoom defines non-GAAP income from operations as income from operations excluding stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, acquisition-related expenses, and litigation settlements, net.
Zoom excludes the amount of employer payroll taxes related to employee stock plans, which is a cash expense, in order for investors to see the full effect that excluding stock-based compensation expense had on Zoom’s operating results.
In particular, this expense is dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of the business. Zoom views acquisition-related expenses when applicable, such as amortization of acquired intangible assets, transaction costs, and acquisition-related retention payments that are directly related to business combinations as events that are not necessarily reflective of operational performance during a period.
Zoom excludes significant litigation settlements, net of amounts covered by insurance, that we deem not to be in the ordinary course of our business.
In particular, Zoom believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses and assist in the comparison with the results of other companies in the industry.
Zoom defines non-GAAP net income and non-GAAP net income per share, basic and diluted, as GAAP net income attributable to common stockholders and GAAP net income per share attributable to common stockholders, basic and diluted, respectively, adjusted to exclude stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, acquisition-related expenses, gains on strategic investments, litigation settlements, net, income tax benefits from discrete activities, and undistributed earnings attributable to participating securities.
Zoom excludes gains on strategic investments, net because given the size and volatility in the ongoing adjustments to the valuation of our strategic investments, we believe that excluding these gains or losses facilitates a more meaningful evaluation of our operational performance.
Zoom excludes income tax benefits from discrete activities, including the income tax benefit related to the release of the US federal and state valuation allowance, because of their nonrecurring nature.
Zoom defines free cash flow as GAAP net cash provided by operating activities less purchases of property and equipment. Zoom defines adjusted FCF as free cash flow plus litigation settlement payments, net. Zoom adds back litigation settlement payments, net because they are not part of Zoom’s ongoing operating activities, and the consideration of measures that exclude such payments can assist in the comparison of cash generated from operations in different periods which may or may not include such payments and assist in the comparison with the results of other companies in the industry.
Zoom considers free cash flow and adjusted free cash flow to be liquidity measures that provide useful information to management and investors regarding net cash provided by operating activities and cash used for investments in property and equipment required to maintain and grow the business. Zoom defines a customer as a separate and distinct buying entity, which can be a single paid host or an organization of any size including a distinct unit of an organization that has multiple paid hosts.
Zoom defines ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time. For the trailing 12 months calculation, Zoom takes an average of the net dollar expansion rate over the trailing 12 months.
Zoom Video Communications, Inc. Consolidated Balance Sheets Unaudited, in thousands. Consolidated Statements of Operations Unaudited, in thousands, except share and per share amounts. Consolidated Statements of Cash Flows Unaudited, in thousands. Skip to main navigation. February 28, PDF Version. For the fourth quarter, GAAP operating margin was For the fiscal year, GAAP operating margin was Customer Metrics Zoom defines a customer as a separate and distinct buying entity, which can be a single paid host or an organization of any size including a distinct unit of an organization that has multiple paid hosts.
As of January 31 ,. Cash and cash equivalents. Marketable securities. Accounts receivable, net. Deferred contract acquisition costs, current. Prepaid expenses and other current assets.