Zoom Share Price Forecast March 2022 – Time to Buy ZM?
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Shares of video communications company Zoom Video Communications (NASDAQ: ZM) are in the red today after closing at $117.23 as of March 31st (19:58 EDT). Investors are nervous about Zoom shares as the pandemic heads into the rearview mirror and many people are returning to in-person meetings. Zoom shares have falled 60% in the last 12 months.
Zoom – Technical Analysis
Zoom’s financial statement indicates a market cap of $35.066 billion with total assets worth $ 7.551 billion. Revenue for 2021 was at $4.10 billion with a profit margin of 33.54% compared to $2.65 billion in 2020.
Moving averages such as Exponential Moving Average (50)(131.84), Simple Moving Average (50)(127.79), Exponential Moving Average (100) (164.89), Simple Moving Average (100)(164.70) and Exponential Moving Average (200)(214.62) are indicating a sell action. Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(87.60 ) and Williams Percent Range (14)(−30.86) are neutral.
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Recent Developments
Zoom was founded by Eric Yuan, a former Cisco engineer and executive in 2011. It became a unicorn company with a $1 billion valuation in 2017. The company became profitable in 2019 when it completed an IPO. It joined the NASDAQ-100 on April 30th 2020. The company experienced remarkable growth after quarantine measures were adopted in response to the COVID-19 pandemic. However, its products have faced criticism related to security and privacy.
Zoom achieved an overall revenue of $4 billion, an increase of 55% year over year for the period ending in January. It’s worth noting that Zoom’s revenue growth was 326% in the financial year 2021. The company’s growth was largely due to an expanding customer base. It had 2725 customers in FY 2022, which generated $100,000 or more in revenue, recording a 66% year over year increase. Enterprise customers for Zoom increased by 35% year over year to reach 191000. Unlike other companies, Zoom is highly profitable.
Zoom generated more than $1 billion in operating income and $1.6 billion in free cash flow. The company is forced to defer revenue from the income statement to the cash flow statement since it offers long-term subscription contracts to customers. Zoom investors are currently skittish about future growth coming out of the pandemic. The company’s management expects revenue of $4.6 billion this year. All of this may point toward the fact that Zoom reached saturation during the pandemic.
Should You Buy ZM Shares?
Apart from Zoom meetings, the company has enterprise growth, Zoom Phone, Zoom Contact Center, and international growth. Management is focusing on enterprises as it produces larger and more durable revenue streams. Management also hopes to cross-sell two products – Zoom Phone and Zoom Contact Center which will drive its net dollar expansion rate. Zoom is offering the Contact Center to those who want a cloud-based call centre connected to their video communications platform. Ancillary products complete Zoom’s offering, such as Zoom chat which can increase spending from its current customers.
Zoom management thinks that the company grows faster outside of the Americas as its international revenue grew just 23% year over year. Investors can consider Zoom shares to be a long-term purchase after looking at its financials and reading the company’s product roadmap. 10%-plus annual revenue growth for the foreseeable future is possible with the long-term growth drivers or new products. Considering the company’s expected FCF growth for the next three to five years now is a good time to buy Zoom shares.
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