Zoom Communications (ZM), What Is Drawing Fresh Attention Now?
Zoom Communications (ZM) recently completed a corporate rebrand from Zoom Video Communications, reflecting its push beyond meetings into a broader work platform. That shift gives investors new context for judging the US$27.1b company.
Recent trading has been choppy for Zoom Communications, with the share price at US$93.62 after a 7.24% 7 day share price return and a 9.27% 90 day share price return. However, a 30 day share price return that declined 7.61% shows some momentum cooling after that rebound. Over a longer stretch, the year to date share price return of 12.36% sits alongside a 1 year total shareholder return of 15.54%. The 3 year total shareholder return of 41.63% contrasts sharply with a 5 year total shareholder return that declined 63.14%, underlining how longer term holders have had a very different experience to more recent investors.
Scan beyond Zoom Communications and review other platform-focused software stocks with a curated set of 19 high quality undiscovered gems that may not yet be on every investor’s radar.
Some investors see Zoom Communications as an AI-first work hub with room to grow, while others view it as a pandemic-era outlier now maturing. Which side does the valuation math currently support?
Most Popular Narrative: 21% Undervalued
Against the last close of $93.62, the most followed narrative pegs Zoom Communications at a fair value of $118.24, pointing to a sizeable valuation gap that hinges on how Enterprise and AI products play out.
Strong and accelerating adoption of AI powered features across Zoom Communications, including AI Companion, custom AI Companion and ZoomMate, with paid monthly active users of Workplace AI features up 125% year over year and AI Companion paid MAUs up 184% year over year, supports a view that AI usage is now translating into both indirect monetisation through lower churn and upsell and direct monetisation through paid SKUs. This can lift revenue growth and support high gross margins near the 80% long term target.
See why 72 investors see Zoom Communications as 21% undervalued.
Result: Fair Value of $118.24 (UNDERVALUED)
Still, the Zoom Communications thesis could be knocked off course if competition from bundled suites caps pricing power, or if heavier AI compute spending compresses margins faster than expected.
Find out about the key risks to this Zoom Communications narrative.
Next Steps
Mixed signals so far on Zoom Communications, right? Look at the full picture for yourself, including its 4 key rewards and 3 important warning signs.
Looking for more Zoom Communications investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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