2/22/2024 0 Comments Nasdaq zm financialsZM currently trades at the lowest valuation it has ever traded at. In one year, a lot can change in the market. A year ago, the company traded for Price/Sales of 22x. The company is now trading at Price/Sales of 5.84x. ZM's current valuation is really cheap compared to what ZM has traded for the last 2 years. These are the main strategies Zoom will use for further growth. The company's management simply wants to expand to even more countries. And as a final strategy, there is accelerated international expansion. At the same time, if ZM still has a good product, it will attract more customers. This is very important so that it does not happen that even more customers start using the products of the competition. Then there is an innovation of their platform continuously. Simply attract existing customers to better and therefore more expensive plans. The other is to expand within existing customers. Zoom wants to achieve this primarily through marketing and its basic plan, which is free of charge. The first is a drive new customer acquisition. I want to introduce you to the main ones now. But there are a few strategies that management plans to use for further growth. And over the next few years, it is estimated that the company's revenues will not grow even in double digits. But that quickly changed and it is now estimated that Zoom sales will grow by only 7.1% this year. Zoom mainly due to the pandemic in the last couple of years has grown sales by hundreds of percent. The balance sheet of Zoom is still strong, though, which is very good.Īpp Economy Insights The Growth Strategies Of Zoom That's something investors need to keep in mind. The problem that ZM currently has is the company's profit, which has only been decreasing in the last few quarters. That means if the management wanted to, tomorrow it could repay all of the company's liabilities, and ZM would still have $3.463 billion in cash. ZM has no long-term debt and has only $2.057 in total liabilities. The company has $5.520 billion in cash and $8.047 billion in total assets. ![]() The company's balance sheet, though, remains strong. By the way, R&D and S&M costs have been rising every quarter for the last two years, which is definitely not good to see. This decline in net income was mainly due to the rather larger cost of R&D and S&M thanks to the competition already mentioned. ![]() That's more than 85% less than a year ago. The net income of the company was in this quarter only $45.75 million. The gross margins of the company remain high as they were 75.1%. Certainly, much slower growth than Zoom has been used to in the last two years. ZM had sales of $1.099 billion in Q2 FY 2023. Now I would like to take a look at the company's financials. These are the 3 main reasons why I think the company's stock has fallen so much in the last year. Although I personally think Zoom has the best product on the market, competition is just really a lot and of course, that's not good for Zoom. Zoom competes with the likes of Apple ( AAPL ), Microsoft ( MSFT ), Google ( GOOG ) ( GOOGL ), and many others. The third reason is that there's more and more competition. This, of course, caused a much slower growth in the company's sales and profits than previously expected and caused an even bigger decline in the company's shares. People could spend quite a bit less time at home and therefore use Zoom quite a bit less than during a pandemic. Zoom was a company that really benefited a lot from the pandemic, and the fact that the pandemic ended wasn't good for ZM. The other reason that caused this slump is the end of the pandemic. The valuation at which ZM traded at its peak was just too high, and eventually that bubble burst. Price/Book of the company was 87x at the time. Even if it was PE, it would be extremely high, but the fact that ZM was trading for a Price/Sales of 69x at the time was really too high. ZM was at its all-time high, having traded for a Price/Sales of 69x two years ago. The first is the valuation at which ZM traded at the time. Why have ZM shares fallen so much in the last 2 years? The reasons that caused this big drop are several. Why Is The Stock Down Over 80%, In The Last 2 Years? ![]() But it doesn't look like it yet, according to current estimates. If the company continues to grow at a reasonable pace, the shares may bring interesting returns to long-term investors. But the company has a few problems to keep in mind. Zoom has a strong balance sheet and good management. There were several reasons for this drop that I would like to present to you in this article. Shares in Zoom ( NASDAQ: ZM) have fallen more than 80% in the last 2 years.
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