Here’s a challenge for those of us afflicted by a belief in the Efficient Market Hypothesis:
Adjusted for inflation, Zoom is cheaper today than in June 2019, when the only lockdowns were for convicted criminals and any non-felon could work, socialize, and study in person to his/her/zir/their heart’s content. The P/E ratio is only 25. Compare this to the sexual orientation and gender identity educators at Disney with a P/E ratio of 78, and the Microsoft behemoth at 32 (though Apple, Tesla, and Microsoft have all proved that having an enormous market cap actually helps with growth since investments can be financed for almost nothing).
I had a Microsoft Teams meeting the other day that was an echo-plagued disaster unless I kept my microphone on mute. Then, using the same PC with the same webcam and speakers, it worked fine today. Zoom definitely seems to work better and the revenue is still growing (up 21 percent in nominal dollars compared to a year ago so a boost of about 10 percent in real terms).
What’s the major risk for Zoom? That Apple will crush them by bumping the FaceTime group max from 32 to 3200? That Webex and Teams will somehow wipe them out? That Google Meet won’t be canceled like everything else (except for ads) that Google has ever offered? If these aren’t huge risks, why can’t Zoom gradually increase its margins and more than justify a current P/E ratio of 25?
Warning: All of my previous investment ideas have been disastrous!
Zoom had a number of scandals, China influence, privacy issues and selling user data:
https://www.theguardian.com/technology/2020/apr/02/zoom-technology-security-coronavirus-video-conferencing
Whether these affect the stock price is hard to tell. No one cared in 2020, but all videoconferencing apps could have a huge scandal at any time.
[My advice is usually wrong, so buy!]
That’s old news from 2020, it was addressed by Zoom in a matter of weeks
> Microsoft Teams meeting the other day that was an echo-plagued disaster
The Borg are not creative or attentive, but they are relentless and have infinite funding. Eventually Microsoft will hire a product manager who does a good enough job, and Zoom’s market will be assimilated. Resistance is futile.
Too bad the last billion trillion in VOIP acquisitions still haven’t managed to create a VU meter or dynamic range compression. Lions still have to use headphones to hear anyone & keep their voices from sounding like roars.
lion: This is a great point. I’m often on Zoom calls where the loudest person is 20 dB louder than the quietest person, making it impossible to establish a reasonable volume level on the phone or PC. Why can’t I at least have a “mellow this person out” button?
Zoom seems to be widely popular. I too believe that it is massively under-priced.
@philg given your experience in enterprise software, I’m *very* surprised that you cite poor performance as a reason why Microsoft will fail against Zoom.
When has an inferior product ever stopped MSFT/Oracle/SAP/etc. from crushing the competition?
Beyond the obvious, Zoom is a better video conferencing tool, however Teams is a proper enterprise collaboration suite with video baked in.
And in a rising interest rate environment, growth stocks get hit the hardest. Zoom will probably be fine long term, but long term might mean LONG term.
There are better opportunities available to public markets investors.
Steve: What is easier to do in Teams than in Zoom? What collaboration is supported in this “collaboration suite” that is difficult or impossible to do in Zoom?
@philg – Well Teams effectively combines Slack, Zoom, and a Calendar into one tool, so I can record a Teams meetings and then make notes & communicate with colleagues in the same workspace.
MSFT Powerpoint is also supported natively.
Stay away from Zoom…get yourself some Public Storage (PSA).