Zoom stock has higher to go, say traders

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: June 3, 2020

Zoom Video Communication shares have gained more than 205% this year, but traders see more upside in the stock.

“We think Zoom is becoming synonymous with video conferencing, ” Todd Gordon, managing director of Ascent Wealth Partners, told CNBC on Tuesday.

The San Jose-based tech firm posted first-quarter earnings on Tuesday, revealing how ubiquitous the health crisis has made the group. The business said at its peaking during the three-month period it counted more than 300 million daily participants in virtual meetings, with use of the firm’s software jumping 30-fold in April.

The company, led by founder and chief executive Eric Yuan, said that sales jumped 169% year-on-year in the three months to 30 April to $328.2m, as it added more than 180,000 customers with more than 10 employees since January – far more than it had expected.

Traders ‘bullish’ on Zoom

When the firm sold its first shares to the public last year, it was valued at $15.9bn. That shot to more than $58bn on Tuesday. The stock is up 6% at $221.18 on Wednesday lunchtime.

The firm’s share price has been able to ride out security flaws in the past, including a vulnerability which allows attackers to remove attendees from meetings, spoof messages from users and hijacked shared screens. Another flaw saw Mac users forced into calls without their knowledge.

The company has apologized and released a Zoom 5.0 version in April, which it says addresses many of these concerns. However, a number of firms and government bodies bar their staff from using Zoom, including SpaceX, Elon Musk’s space exploration company, Google, NASA, the US Senate, and New York City’s Department of Education.

The firm competes with Microsoft, Cisco, and Alphabet (GOOG) who all sell their own video conferencing platforms.

Ascent Wealth Partners’ Gordon said: “There’s been some security missteps, but they’ve addressed it and we continue to remain bullish.”

Zoom’s billionaire founder

But Michael Bapis (pictured), managing director of Vios Advisors at Rockefeller Capital Management sees generating regular paying customers as an issue for the business.

He said: “How and will they turn the participants into paying customers alongside trying to make sure these customers are secure and the networks are secure.”

But Bapis added: “They have a market share right now unlike any other. It’s a massive opportunity for the company.”

The spike in Zoom’s stock price has catapulted its founder Eric Yuan to the league to top billionaires. According to Forbes, Yuan’s net worth stands at $9.6 billion. Jeff Bezos and Elon Musk have also added to their personal wealth this year as Amazon and Tesla soared to record highs despite the pandemic.

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Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.


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