The trend is permanently towards hybrid working models
Steady growth through corporate customers in the subscription model
Zoom as an overweight position, not only in the ARK portfolio
The shares of the US video conferencing provider Zoom Communications experienced a boom during the pandemic and peaked at an incredible 740 percent.
However, when the companies gradually brought their employees back to the office, the papers lost massively. Since the beginning of January, Zoom shares have lost 37.38 percent and are currently trading at $115.17 (closing price on June 22, 2022), since June 1, 2021 there has been a dramatic 65 percent loss.
The company’s current figures from the first quarter of 2022 now again indicate upside potential for the share, as they show growth of 12 percent. On the one hand, this exceeds our own expectations and, on the other hand, confirms the assessment of many analysts. According to The Motley Fool, one positive aspect is that the company has invested in research and development in order to maintain the lead it has gained over the competition during the pandemic and is now increasingly relying on the support of hybrid working models.
Hybrid forms of work are catching on
In a current research report, ARK Invest now indicates a price potential of 1,202 percent for the share for a time horizon of 4 years: In 2026, the ARK analyzes see Zoom at 1,500 US dollars. The basic prerequisite for this calculation is that hybrid working models will also prevail in the future.
The proportion of remote or hybrid jobs is currently declining sharply compared to the previous year, with analysts speaking of a drop to 66 percent. However, the shortage of skilled workers everywhere will continue to force companies to make flexible models possible in the future.
According to the forecast, decentralized hybrid working models will prevail in the science industry by 2026 and 75 percent of all global knowledge workers will work with video communication systems. In comparison, according to ARK research, it was 51 percent in 2021. This corresponds to an increase of 47 percent. This is Zoom’s opportunity, as the company is benefiting from this trend and is well prepared for growth.
In simulations, the Zoom share shows enormous upside potential
The ARK analysts have created various scenarios for the Zoom share using a Monte Carlo simulation: In the middle forecast, the price rises to 1,500 US dollars. The experts assume a growth rate of 7 percent, which corresponds to an increase of 291 million users per year. At the same time the monetization of the user base, because by 2026 around half of Zoom users will be paying corporate customers.
According to the analysis, there is a 25 percent chance that the stock will trade at $800 in 2026 and an equal chance that the price could reach $2,000 or more. In other words, compared to the current price of $115.17, even the bearish scenario represents an increase of almost 600 percent.
Not only ARK Invest is optimistic about the share
In the portfolio of the ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW), the Zoom shares are currently well represented with 6.2 and 5.5 percent respectively (as of March 31, 2022). The analysts from ARK Invest are also standing With their price target of EUR 1,500 they stand out from the crowd of analysts, but they are not the only ones with an optimistic assessment. According to Marketscreener, 16 of 28 analysts issued a “hold” recommendation, 8 a “buy” recommendation and 4 an “increase” recommendation in May, with an average price target of USD 124.45.
Morgan Stanley recently confirmed its buy recommendation for Zoom and lowered the target price to $140. According to Yahoo Finance, analyst Meta Marshall said that investors in Zoom stock “have to look a long time for a reason [die Aktie] not to own”.
Zoom CFO Kelly Steckelberg told Marketscreener that some of the cash will be used to fund board-approved share buybacks of up to $1 billion and that it is looking for M&A opportunities. The company is therefore currently examining possibilities of mergers and acquisitions.
Editorial office finanzen.net
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