Zoom opens at 65. Ridiculous.
One good thing, if this price holds it’s going to make ZS and MDB look like bargains.
Incidentally many of the SaaS stocks traded down to their 50dma this morning and bounced. I know TA is off topic here but those numbers to mean something to many who move the market and do give good buy signals.
I bought MDB and ZS right above those lines this morning.
Colin
One good thing, if this price holds it’s going to make ZS and MDB look like bargains.
Yeah, maybe. But that’s not a great way to justify the price of our holdings now is it?
Zoom opens at 65. Ridiculous.
Yes, that’s seems ridiculous. My guesstimate is about 30 times forward sales. Is that accurate? ZS is at 25 times foward sales but with a growth rate about half ZM’s. But I would bet that ZM’s growth slows substantially. And it doesn’t have the proven track record or sustainable advantage that ZS has. I’m staying on the sidelines for now.
Estimated market cap of Zoom at present cost of $63 is $16.9 billion on what, $250 million or less of revenue per year (yes growing like a weed) but selling for something like 67x revenue.
Sorry, that is a bubble. That is scary, particularly if someone wants to try to justify it. That is a mania, chasing a stock because you think others will chase it even higher, and they believe others will bid it higher.
Tinker.
Estimated market cap of Zoom at present cost of $63 is $16.9 billion
to put that in context, that is about triple AYX, ESTC, or NEWR’s market caps, and about double MDB, ZS, or TTD.
I too, am not touching it. I bought some additional AYX and TTD this morning, given how much they are down, and what I think they will be worth.
-mekong
Estimated market cap of Zoom at present cost of $63 is $16.9 billion on what, $250 million or less of revenue per year (yes growing like a weed) but selling for something like 67x revenue.
Sorry, that is a bubble. That is scary, particularly if someone wants to try to justify it. That is a mania, chasing a stock because you think others will chase it even higher, and they believe others will bid it higher.
Well, if they revenues growth at 100%+ for another year or two then perhaps it is worth it. BTW, I calculate the EV/S at 50 which is based on $62 share price and 268.67 shares out. I used $176M in cash to get EV but they will have a bunch more than that in proceeds from the IPO.
I’m not buying shares, but I did put in for shares at Fidelity. I did not receive an allocation. Did anyone get any shares at $36?
Chris
I put in with Fidelity and confirmed but got nones.
This is crazy even for me. I intend to own ZM. Nothing about their product and business is different today. But market is giving it a bubble valuation. We’ll see I guess.
D
Estimated market cap of Zoom at present cost of $63 is $16.9 billion on what, $250 million or less of revenue per year (yes growing like a weed) but selling for something like 67x revenue. Sorry, that is a bubble. That is scary, particularly if someone wants to try to justify it. That is a mania, chasing a stock because you think others will chase it even higher, and they believe others will bid it higher.
Tinker.
Tinker nailed it again. I’d call 67 times revenue a tulip mania. I took a lot of the money I had set aside for Zoom and added to my Mongo at $125 or so.
Saul
Atlassian got shares at $36.
They made an investment as a $10 M loan last year, convertible to shares at the IPO price.
So they just picked up 277 K shares at $36.
Box did the same for $5 M.
Jim
Estimated market cap of Zoom at present cost of $63 is $16.9 billion on what, $250 million or less of revenue per year (yes growing like a weed) but selling for something like 67x revenue. Sorry, that is a bubble. That is scary, particularly if someone wants to try to justify it. That is a mania, chasing a stock because you think others will chase it even higher, and they believe others will bid it higher.
Tinker.
Tinker nailed it again. I’d call 67 times revenue a tulip mania. I took a lot of the money I had set aside for Zoom and added to my Mongo at $125 or so.
Well, they did $330 million last year, (118% rev growth) and if they double revenue this year to $660 million its more like 25.6x forward revenue. Still crazy high, but not as absurd as 67x revenue. Clearly the market making institutional growth investors are expecting at least 100% revenue growth for this year. The TTM metrics are nice, but the past is past - what have you done for me lately? 
Best,
Matt
About 29.73% of me wants to short this stock hard and heavy… A $16B market cap for a company whose only real “moat” might be simplicity and the fact that they purpose-built a cloud to host the video stuff seems VERRRRY steep.
I thought it would open at $50, but $60+?? Smell the tulips while they last.
I think that pricing at $36 and trading at $64 were pretty predictable a week ago (https://discussion.fool.com/and-that-assumes-it-opens-at-32-no-d…)
I honestly don’t understand the reaction to ZM here. On some stocks, “valuations don’t matter, I just buy great companies”. But on ZM, it’s suddenly bubbles and tulips on a P/S that is the same order of magnitude of the rest of the board favorites. And in some cases “technical details don’t matter, the story is in the revenue growth” but here there’s a YoY run-rate grower > 100% off a very high base, but the moat is problematic because of the technology?
Have been watching this one with great interest like most on the board here ever since it came to our attention and was very eager to start a position. However, at these valuations I’m far from interested and as others have mentioned: this seems like bubble territory to me as well. Not touching it but it will definitely stay on my watchlist.
Have started a position though in Guardant Health though after yesterday’s and today’s drop.
Good luck all.
Seems like everyone is sitting this one out - me included.
ajm it’s not that valuations don’t matter, it’s just comparable to other opportunities (especially today with a lot of stuff starting off deep in the red), there doesn’t seem to be much room in ZM. “Priced to perfection” I believe is the term. I think the naysayers who are emphasizing “no moat” will be proven incorrect in the future, but that still doesn’t change the $16B market cap ZM is starting out with. Where are you going from there? I certainly think ZM will grow into it, but I think it’s a higher likelihood that companies like MDB/ZS/AYX will provide better returns over the next year
W/regards to why the board is (mostly) avoiding the stock is because it’s just IPO’d. There have been several threads on the dangers of buying stocks that have only had a few quarters of being traded publicly. It’s hard to get an idea of where a company is going if information is limited.
Buying this stock is more speculation than prudent and careful investing - stock roulette. I’d rather sit on the sidelines and be entertained.
Lots of good growth companies with better track records were on sale over the last few days - I’d rather put my money there.
… a P/S that is the same order of magnitude of the rest of the board favorites
I didn’t know if that was meant to be humorous, but I found it a bit funny. I’m not sure that we are so price tolerant that a 10x difference wouldn’t be meaningful.
But I think that the answer to your question is partly because we don’t own it, so it’s easier to be critical. We can commiserate here about how we didn’t want to be part of that club. If we all owned it and it ran up over the last 6 months, surely some would see the rosy side. IF they grow for a while at 100%, they are dirt cheap at 67x revenue.
Will they, Hellifiknow. I’m still trying to figure out why NTNX isn’t going to grow at >30% going forward.
Zoom grew revenues at 146% in 2017, 118% in 2018, and 108% in q4. So the idea that they may be appropriately valued if the keep doubling revenue is a bit of a stretch. Their decelerating growth suggests they won’t be doubling revenue for long. On top of that I don’t want to buy stocks that will be fairly valued and give no price appreciation potential if they just keep growing 100% for the next 2 years.
The other cloud stocks I have are already overpriced. Doesn’t mean I’m being inconsistent buying something even more overpriced I have less conviction on they can sustain any type of moat.
I echo the statements made by many of you on the valuation of Zoom. I tried to get in with an order at 40, but of course was unable to do so. It is so very disappointing after a few months of anticipation.
I do think valuation matters and this one is eye popping. I am not saying that people won’t do well who bought in today, as is often discussed here, the value creation of high growth SaaS stocks is huge. But I think the bet at these levels is asymmetric, and I’m staying out until I see some reasonable pricing.
Congrats if anyone got in at the IPO price and for every zoom insider reading this board (I’d bet there are some). Some of you just had a life changing day.
Rob
One small but important point to correct: several posts on this thread with high number of recs are suggesting that Zoom’s revenue is “$250 million or less”, putting them at a 67X revenue multiple. That is simply not accurate.
According to Zoom’s S1: they’ve done $330M in the last 12 months and are an implied run rate of $423 in ARR based on the most recent Q (https://www.sec.gov/Archives/edgar/data/1585521/000119312519…).
This puts them at about 38X revenue - not all that much more than Zscaler & Zoom is larger, growing faster, and already profitable.
humbly,
nat