In a world of lock downs and social isolation we all need company, we need to be able to talk, see loved ones, hold meetings and pitch for business. Thank god therefor for Zoom….. As we all hunker down in our homes, Zoom has emerged as the conferencing system of choice, sweeping aside established players such as Skype, Hangouts and everyones (least) favourite – Webex.
It is perhaps not surprising that despite the collapse in the stock market and the run on more traditional stocks, we still seem to manage to find a diamond in the rough, a gem that we can hang on to and hopefully turn into profit. The problem is that whilst the last couple of days have seen Zoom shares drop, its value is, and remains significantly out of kilter with its revenue and revenue potential.
Whilst Zoom’s popularity has inevitability triggered concerns with stories of porn bombing and various other security flaws, the real problem is, and remains the product itself. It is without doubt a great product but it is a great product that is currently being excessively used and therefore excessively valued because of a moment in time. Covid-19 will settle and we will find a cure and when we do we will revert back to our old ways of face to face meetings. Yes there will be a residual benefit but the value of Zoom is and remains disproportionate to its market position in the short to long term.
If Zoom is to realize its potential then it needs to take advantage of its current high and raise capital and invest. Acquisitions designed to increase its revenue potential and extend its customer experience. If it fails to do so then it will be yet another example of an over valued tech business that is good but not great….