Yeah, I know…
Puns aren’t really the height of intellectual comedy and asking if you ZOOMed in on a stock (which is obviously named Zoom (ZM) – it’s probably less funny.
However, it IS apropos, as over the past few months there have been thousands of people who have seen the use of online video meeting platform, Zoom – went ahead and bought stock…
And who could blame them, really? When you see everybody posting pictures or talking about how they’re on a Zoom meeting – it’s hard not to see the correlation between use and Zoom’s stocks going up.
But is this accurate?
Does the widespread use of Zoom mean that its stock is a smart buy?
Or were people duped into thinking it is?
The answer may surprise you…
If there is one positive thing that you can point to about the pandemic – is that many businesses were able to continue running while allowing their employees to stay at home – and saw that it was successful.
One of the reasons that they were able to do that was because of the video conferencing service – Zoom (ZM).
For a bit of a background – Zoom was founded back in 2001 – but didn’t go public until 2017, when it debuted with a $1 billion valuation…
Of course, while the company knew it had a valuable service on its hands – the company technically wasn’t actually profitable until 2019 – but being tenacious paid off and the company went from a $1 billion valuation in 2017 to where it currently sits at just over $108 billion today (but we’ll get back to that in a second).
That’s an incredible value jump in just 3 years…
But the question remains: Is it a smart play for investors?
Because, honestly, on the surface – it looks like a no brainer, right?
As a service that is being used by MILLIONS of people an THOUSANDS of businesses and no true end of the lockdown orders in sight – it seems that Zoom could be around for a VERY long time.
Lots of people aree using its product…
A promise of future business whether the lockdown orders continue or not…
It truly seems that Zoom would be one of those stocks that any investor would welcome into their portfolio.
But should they?
Is it really as good as it seems?
Remember a few moments ago when we talked about Zoom’s current valuation of $108 billion and how we’d get back to that?
Well, let’s jump into that – because there’s something you should know about size of Zoom’s surge…
First, understand, if Zoom had moved from that $1 billion to $108 billion at a steady clip – the Gorilla wouldn’t be too skeptical – I’d be happy for those investors who moved in at the right time and were now sitting on a windfall…
But that’s not exactly what happened – as at the beginning of September (September 1st, to be exact) the value of Zoom jumped and astonishing 41%.
Now, it’s not often that you see a company worth nearly $100 billion jump 41% in a single day… and there’s a reason for this – it doesn’t generally happen…
But it did to Zoom after reporting MUCH better than expected earnings.
That 41% represented an increase of $37 billion in market capitalization – or basically enough to buy Ebay (EBAY) – overnight.
That’s HUGE…
However, as big as it was, the jump wasn’t “real” and since the high it hit that day – it’s gone down 20% due mostly to an across-the-board tech stock sell-off.
Which may prove to be a problem…
Because, currently, most stock analysts have it sitting middle of the pack – due to what could be an overvaluation problem – however, any way you slice it, that ain’t good.
Which is a shame…
As Zoom has a LOT of momentum – and we could see this current valuation carried for the next few months – however – we ‘re currently sitting on what looks to be a new tech bubble…
So we have to be careful…
If you’re looking at Zoom as a “buy-and-hold” – you may be barking up the wrong tree – and it may be best to just let this sleeping dog lie.
But…
As always, it’s up to you – just be sure to do your due diligence.
Of course, if you’d rather get more solid shots at REAL and fast winners – then you’ve come to the right place – as GorillaTrades could be just the thing you need to bring your investing to the next level.
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“Well, you know how it feels if you begin hoping for something that you want desperately badly; you almost fight against the hope because it is too good to be true; you’ve been disappointed so often before.” – C. S. Lewis