Zoom Video: Normalization Gone Bad

 

  • Zoom beat FQ2'22 analyst targets, but the size of quarterly beats continues to trend downwards.
  • The company forecast FQ3'22 revenues to decline sequentially in further signs of a slowdown in business.
  • The stock headed into the quarter trading at 20x forward sales while the future growth rates don't warrant this valuation.
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A lot of individual investors didn't want to listen, but Zoom Video Communications (ZM) faced nearly impossible comps due to pulled forward demand. In addition, the recent deal to acquire Five9 (FIVN) is exactly what companies do in order to replace stalling growth. My investment thesis remains very Bearish on the stock not correctly priced for the new normalized, post-Covid phase.

Read the full article on Seeking Alpha. 


Disclosure: No position mentioned. Please review the disclaimer page for more details. 


Update - Sept. 17

ISS recommends $FIVN shareholders vote against the deal. One has to wonder why management agreed to a deal with an over priced stock in the first place.

  • Proxy advisory firm Institutional Shareholder Services has recommended that holders vote against Zoom's (NASDAQ:ZM) deal to acquire Five9 (NASDAQ:FIVN).
  • "No surprise, ISS recommends vote against Zoom's deal to acquire Five9. Vote is on September 30th. ZM's decline has brought deal value to $153, well below price of FIVN before deal was announced on 7/18," tweets CNBC's David Faber. 
  • Finviz Chart

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