almost 4 years ago • 2 mins
Teleconferencing provider Zoom reported better-than-expected results across the board late on Wednesday, but there are still reasons to worry its connection with investors will get disrupted 📲
Zoom’s fourth-quarter profit was more than double analysts’ predictions, and its forecasts for the coming year were also startlingly positive. That might have something to do with the reputation it’s recently picked up as one of the few stocks that might actually benefit from the coronavirus outbreak: more and more companies, after all, would now prefer to hold remote meetings than risk infection 🦠 So never mind COVID-19 – investors certainly aren’t immune to Zoom’s charms: its shares are up more than 70% this year alone, which has pushed its valuation to 37 times forecast revenue and 270 times next year’s projected profits.
Zoom’s shares climbed higher throughout Thursday, but they initially fell despite its strong update. Markets don’t always react as you’d expect them to, mind you: prices often fall on good news and rise on bad 📊 It’s more a matter of how that news compares to investor expectations. If those expectations are too high – like they were with Zoom – its shares might initially fall no matter how positive the update.
Coronavirus might’ve pushed new users to Zoom, but the real test will be whether it can monetize them. Zoom’s ability to do just that seems to have slipped since its well-received initial public offering: it’s failing to generate as much of a revenue uptick from the customers it’s held for a year or more as it did in 2019 🤔 The teleconferencing provider needs to prove it can keep all those new users too: as Finimizer Bami wisely pointed out in one of our Premium chats, “I'm not sure whether all these new sign-ups will stick around after the outbreak is over”...
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