Zoom Video Communications Inc., Zoom Video for short, seems to be one of the very few winners from the current coronavirus disease COVID-19 crisis.
Zoom Video is a remote conferencing services company that provides a remote conferencing service that provides video conferencing, online meetings, chat and mobile collaboration.
Zoom Video's stock price is up circa 57% year to date in 2020 to 159.56 USD as of yesterday. Why? Simply because the demand for Zoom Video's video conferencing services exploded due to everybody now working remotely to social distance and prevent the spread of coronavirus.
So what is the intrinsic worth of Zoom Video? I estimate that while we are in pandemic Zoom Video's stock price could climb to 700 USD which translates in a possible market capitalization of around 210 billion USD.
We are yet to see the effect of the coronavirus disease COVID-19 pandemic on the financial results of Zoom Video. But in most cases a market capitalization of 210 billion USD will translate into extremely, extraordinarily high Price/Earnings, Price/Sales and Price/Book ratios for Zoom Video. For example if Zoom Video continues to grow revenue at its most recent pace with 1 billion USD revenue for a trailing year at 210 billion USD market capitalization Zoom Video will trade at Price/Sales of 210, which is a really huge Price/Sales multiple.
The main risk of my prognosis of Zoom Video's market capitalization rising to 210 billion USD is the end of the coronavirus pandemic. When that comes the price of Zoom Video could fall, crash abruptly. Yes, the demand for Zoom Video's services will still be higher than before, but most workers will go back working in large common space offices.
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Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
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Respectfully yours,
Petar Posledovich
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