Why Zoom’s Valuation Is So Controversial
Analysts are split about the top-performing remote work stock
Zoom has become a household company overnight, vaulted from a teleconferencing company “powering business meetings” to a lifeline for millions of workers, families, and friends. Since last December, its user base has grown from less than 10 million daily meeting participants to over 300 million daily (as of late April). Its stock is up over 200% year-to-date.
Zoom reported its quarterly earnings for Q1 fiscal year 2021 in early June and had arguably one of the best quarters, ever, in software history by any metric. We can use the company’s recent performance as a lens to contextualize its current valuation and to better understand the importance of forecasting business performance.
Zoom’s Q1 at a glance
In its first quarter, Zoom’s revenue growth accelerated from 88% to 169% year-over-year, and the company saw strong profitable growth across the board:
- Revenue growth: Zoom made $328.2 million in revenue, a growth of 169% year-over-year.
- Customer growth: Clients with…
