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Zoom beat quarterly earnings expectations but investors are bracing for a slight slowdown in growth … [+]
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Despite yet again topping quarterly earnings expectations, Zoom Video Communications
ZM
Zoom reported revenue of $777.2 million during its fiscal third quarter, which ended on October 31, up 367% from a year ago, with net profits of 66 cents a share. That compares to a 355% revenue jump in the second quarter and 169% increase in the first quarter.
Investors were disappointed, however, because Zoom forecast that revenue won’t grow at the same pace going forward. It predicts 329% revenue growth on an annualized basis in the fourth quarter, which would be a slight slowdown. Zoom is projecting revenue between $806 million and $811 million for the fiscal fourth quarter.
What’s more, investors could be increasingly wary of Zoom’s high valuation. It has been one of the best performing stocks in 2020, rising by nearly 500% so far this year. Now trading at more than $405 per share, Zoom, which has a market capitalization of $115.9 billion, expects to pull in $2.5 billion in revenue for the full fiscal year through January 2021.
Even after accounting for the stock’s recent pullback, Yuan’s net worth has grown at a fast clip this year. It has nearly doubled since Yuan appeared on The Forbes 400 list of America’s wealthiest people, which used stock prices from July 24. Yuan, now the 31st richest American, according to Forbes, has risen through the ranks this year in tandem with Zoom’s business, which has remained in high demand as millions of people working from home rely on video-conferencing. He owns approximately 15% of the company today.
Even with the company’s fast-paced growth this year, Wall Street analysts are still quite bullish on Zoom stock. Some 90% of Street analysts covering Zoom give it a “buy” or “hold” rating, while just 10% give it a “sell” rating, according to Bloomberg data.