Brian Stoffel's avatar
$67.1m follower assets
Our Next Pick is SEVERELY out of favor
This week's pick comes from @brianferoldi -- though we both already own this stock in our portfolios: Zoom Video Communications $ZM

Here's what you need to know:

The net dollar expansion rate among $100K+ customers remains strong

Beyond that, we aren't totally convinced of impenetrable switching costs, but the brand value is undeniable.
The company has shown there's optionality -- and room for leverage ahead as it has reaccelerated its spending.

Competition is definitely the most important of all the threats (dilution is actually going in the right direction recently as the company has bought back stock)
On the valuation front, $ZM is awfully cheap versus its history and the market for larger growth (ish) stocks in general
Here's what we're watching
And how it scored on our frameworks...
But what do YOU think of Zoom today?
Zoom Video Communications has a...
66%Narrow Moat, thus a low price
33%Wider-than-expected moat
71 VotesPoll ended on: 07/27/22
Ross Sterland's avatar
Teams being part of the MS Office package guarantees it a large market share as most corporations won’t pay for a second application.
Conor's avatar
Do you think Microsoft Teams will impact Zoom's sales at all? My employer used WebEx exclusively before Teams came out. Now, we are almost exclusively using Teams but have the option to use WebEx. Microsoft Teams has several more features available than WebEx.

My money is on Teams and Zoom dominating the industry for the next 10 to 20 years.

Great pick!
The Revolutionary's avatar
@conorvalue Teams takes so much memory compared to the Zoom/Slack combo. Salesforce very smart to buy Slack. Zoom is upgrading platform, but has a long way to go IMO. I use it multiple times a day, and I know the competition.
Keegan's avatar
@conorvalue everyone hates teams
Steve Matt's avatar
@keeganitreal I’m a rare one who prefers then because I find it exponentially more useful for department use than Zoom was.
Conor's avatar
@keeganitreal I can never find any files on it. It's very confusing.
Luka 🦉's avatar
@keeganitreal I love Teams.
Matt's avatar
@keeganitreal Yeah, for sure. Sadly, Microsoft Office is needed too much... for now.
Manish Jain's avatar
As a Zoom holder, I hope it can bounce back. I agree the valuation multiple is depressed, but I think its biggest challenge is returning to high growth and getting a valuation re-rating. Zoom's growth lags other SaaS names. What I hope is that Teams doesn't impede its opportunity the way that it impacted Slack. Interactive chart link:

Manish Jain's avatar
@wiijiiceo but perhaps an acquisition target just like Slack? Who could be buyer?
Joshua Simka's avatar
Who's out there making video calls that isn't already using Zoom or Teams? I just don't see where the future growth is supposed to come from. I know everybody hates Teams, but we all still use it...