This is a step-by-step stock review to answer the question, is Zoom (ZM) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Zoom (ZM) stock a good buy?
1. Zoom Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founded in 2011: Zoom was founded by Eric Yuan, a former executive at Cisco WebEx, aiming to create a user-friendly video conferencing solution.
- Launched in 2013: Officially launched its video conferencing platform, quickly gaining popularity for its ease of use and reliable performance.
- Rapid Growth: Experienced exponential growth, becoming a leading video communication tool for businesses, schools, and individuals worldwide.
- IPO in 2019: Went public on the NASDAQ under the ticker symbol ZM, achieving significant investor interest and a strong stock performance.
- Pandemic Surge: Usage skyrocketed during the COVID-19 pandemic, as remote work and virtual meetings became essential, solidifying Zoom’s market dominance.
- Innovations: Continuously improved its platform with features like Zoom Rooms, Zoom Phone, and Zoom Apps, enhancing user experience and integration capabilities.
- Security Enhancements: Invested heavily in security and privacy measures following initial concerns, ensuring a safer user environment.
- Global Expansion: Expanded its infrastructure and services internationally, catering to a global user base and diverse markets.
- Community Engagement: Supported educational institutions, healthcare providers, and nonprofits with free or discounted services, fostering community support.
- Financial Performance: Demonstrated strong financial growth with significant revenue increases, maintaining a robust market position in the video communications industry.
2. MOS (Margin Of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Watch
- Score: 67
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Zoom makes money:
- Subscription Fees: Generates revenue from subscription plans for its video conferencing and communication services, including Basic, Pro, Business, and Enterprise tiers.
- Webinars and Events: Earns from hosting and managing webinars and large-scale virtual events, with charges based on event size and features.
- Zoom Rooms: Profits from selling Zoom Rooms, a hardware and software solution for conference rooms and collaborative spaces.
- Hardware Sales: Sells compatible hardware such as cameras, microphones, and speakers through partnerships with hardware manufacturers.
- Add-Ons and Upgrades: Charges for additional features and services, such as cloud storage, advanced analytics, and administrative tools.
- Professional Services: Offers professional services, including training and consulting, to help organizations optimize their use of Zoom products.
- Integration Partnerships: Partners with other software providers for integrations and earns from joint marketing and referral programs.
- International Expansion: Gains revenue from expanding its services into global markets with tailored solutions and local pricing.
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4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Zoom stacks up against other companies.
- Paylocity Holding Corporation.(PCTY) – 100
- Manhattan Associates, Inc.(MANH) – 100
- Intuit Inc.(INTU) – 89
- AppFolio, Inc.(APPF) – 84
- SurgePays, Inc.(SURG) – 84
- Zoom Video Communications, Inc.(ZM) – 67
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Platform Growth: Eric Yuan Oversaw massive growth of Zoom’s user base, transforming it into one of the most popular video conferencing platforms globally.
- IPO Success: Led Zoom through a highly successful initial public offering (IPO) in 2019, significantly increasing its market value and public profile.
- Product Innovation: Championed continuous innovation with new features and improvements, such as virtual backgrounds and enhanced security measures.
- Scalability: Ensured the platform’s scalability to handle unprecedented surges in demand during the COVID-19 pandemic, maintaining performance and reliability.
- User Experience: Focused on improving user experience by simplifying interface design and enhancing functionality, contributing to widespread adoption.
- Global Expansion: Expanded Zoom’s market reach with strategic international growth and partnerships, broadening its global footprint.
- Corporate Culture: Fostered a positive and innovative corporate culture, driving employee engagement and company growth.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Zoom (ZM) is 78/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Zoom (ZM) stock a good buy?
Some of the top questions investors can have is Zoom (ZM) stock a good buy or should I buy Zoom (ZM) stock?
Zoom Video Communications is a compelling investment due to its dominant position in the video conferencing market and its rapid growth during the pandemic. The platform’s ease of use, scalability, and robust feature set have made it a preferred choice for businesses, educational institutions, and individuals worldwide. Zoom’s strong financial performance, driven by its subscription-based model, provides steady revenue and high profit margins.
The company continues to innovate with new features and integrations, enhancing its appeal and maintaining its competitive edge. Additionally, Zoom’s expansion into new areas like webinars and phone services offers further growth opportunities.
However, investors should be mindful of potential risks, such as increased competition from other video conferencing platforms and concerns over data security. Additionally, the post-pandemic market may see reduced demand for remote communication tools. Despite these challenges, Zoom’s strong market position and ongoing innovation make it a strong investment candidate.
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To truly know if Zoom is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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