Zoom News

[IRdoc]

The training program where I did Radiology is spread over several hospitals. For teaching we needed to share a monitor and two way audio via conferences, but had multiple faculty who wanted to use their own laptops. We tried multiple options and WebEx ended up being the best option, but still about 10% of lectures didn’t work remotely for one reason or another.

They switched to Zoom about a year ago and found it to be far more robust. The screen sharing, multiplatform ease of use, drawing on the host screen, easy to join on mobile devices, all were theoretically possible with WebEx but just didn’t work as intended. One of the residents compared it with iOS vs. Linux. If you’re technically savvy and have the right tools, both would work fine. For non-techies (and many doctors are even below average) iOS is far more stable, intuitive, and easy to use, if less powerful and flexible.

Offering it to schools for free is a great long term strategy. Microsoft’s products may not be so user friendly but everyone grew up using them so they have staying power. Apple has been targeting education.

No position in Zoom but considering it.

[rainphakir]

I checked with the IT director for a local community college, as to how they are adjusting to the rest of the spring 2020 semester being online.

They are, of course, using their CMS system, but are in the process of deciding which teleconferencing software to use system wide, for synchronous needs. As he was talking, he mentioned Zoom first 50% of the time.

Zoom works for people who have poor or slow internet service. This is a real need for their student users!

He did say that a major deciding point would be cost. Zoom is free for a “trial period”, then they want a subscription.

They are surveying which software option is best known among the faculty, and easiest to deploy to the student body. There was no info on a conclusion there. See my comment above - Zoom 50% of the time. When I asked about webex, teams, etc, he sorta slid the comments back to Zoom.

He did say that whatever the choice, it MUST BE EASY. He mentioned being in a teleconference within the last few days, and having to have a tech, in the meeting, to troubleshoot. He said that was frustrating, and certainly not an option for instructors and teleclassroms.

This is a data point of one?

ralph

He also said that they were rushing into a decision, without sufficient planning. LOL

[draj]

As for anecdotes Some classes at Columbia are now being taught via Zoom. Maybe more than a few at this point.

[LifeOfDreamer]

I live in an upper middle class chicago suburb…high taxes, all that.
Kids are home, and surprisingly no effort even being made to do teleconferencing…just “elearning” assignments given and teachers available (online/email) as needed.

I actually sent one of the teachers the free Zoom K-12 news release, and she said no plans for videoconference at this time.

if you aren’t using video, for business meetings, then I am not sure what is lost.
My company is fortune 500 $10b+, and like a lot of larger enterprises we leverage existing Microsoft or Cisco tools (Teams, Webex, Skype if you haven’t moved to Teams yet).

For schools, Google/chromebooks dominate, so most have access to Google Hangouts.

I do not question for a minute that ZM is growing rapidly, and was prior to Covid and now is getting additional boost.

I always come back to valuation.
Days can feel like weeks and weeks like months sometimes, and I notice that once-darlings and “market crushers” like TWLO or ZS or MDB fall out of favor seemingly overnight.

So my issue is, and has been, valuation with Zoom (ZM).
Let’s say they do $2b this year with 400% growth or whatever that would be…do they eventually plateau around $3-4b…4-5b? What is the appropriate P/S at that time? Why wouldn’t they float down to 10 or under like most mature companies do? A company like ServiceNow can get so much more money out of a large corp enterprise than Zoom can for videoconferencing…just the nature of the product they are offering.

You want Microsoft O365…well then welcome to M365, which is Azure, O365, security, and collab tools like Teams all bundled up. That is what the $1T company is focused on driving via their mammoth sales force and channel partners.

People thought Arista was somehow a Cisco-killer, and I kept scratching my head looking around at the lack of Arista my company sold and wondering where the disconnect with reality was. I see same issue with Zoom here.

Unless they expand their products/offerings, I just wonder what the best-case-scenario is in actual revenue they can bring in, for “just” videoconferencing.

relatives can (and have been for years) use Facetime or Hangouts or whatever the Facebook equivalent is via their phones. And we have been functioning for years with phone/text just fine.

Business meetings have been taking place for years and years with sharing of screens and audio…might be a millennial thing, but GenXers would rather just get stuff done rather than hang out all day on videochat.

If I was fortunate enough to have been in a large ZM position last few months up thru today, I would convert it to cash asap and pat myself on the back for being able to buy bargains with the money, as the upside in ZM is anyone’s guess, given the already-nosebleed valuation. Just my opinion.

Dreamer

[drew1618t]

Some news that is not as positive as the rest. The Chief of Naval Operations (CNO) told the United States Navy to not use Zoom. The NAVADMIN was to instruct the navy of effective use of remote work options.

“As we continue to operate in remote work environment, we cannot allow ourselves to violate security protocols. Using personal e-mail and other commercial services (e.g.: Gmail, Zoom, WebEx, and others) for official business is not permitted. The potential vulnerabilities open the door for our adversaries to collect information that could be used against us.”

https://www.public.navy.mil/bupers-npc/reference/messages/Do…

The point of this was for non-classified work to not use commercial options moving forward.

Good news is that the CNO assumes every one knows what Zoom is.

[draj]

I always come back to valuation.
Days can feel like weeks and weeks like months sometimes, and I notice that once-darlings and “market crushers” like TWLO or ZS or MDB fall out of favor seemingly overnight

Dreamer Dad: Excellent point. I have two observations . First we won’t have an inkling of Zoom’s ultimate or likely revenue from its accessible market until this virus subsides and we see some subsequent quarterly reports. It could be much greater than anyone anticipates because of current high adoption rates that may well translate into blowout business…

Second TWLO,ZS and MDB all gave indications of poorer performance a while ago. There was several months warning from each based upon info in the quarterly reports. I sold out of all three, I don’t remember when (so much has happened) but I just noted my sale price for MDB was $152.

[PaulWBryant]

do they eventually plateau around $3-4b…4-5b?

A while back ZM’s CEO stated a TAM of 43 billion (https://finance.yahoo.com/news/3-key-ceo-quotes-zoom-1445005…), so you’re off by an order of magnitude, Dreamer.

Bear

[LifeOfDreamer]

so you’re off by an order of magnitude, Dreamer.

Bear

–

I will get off the subject, as I just don’t see people wanting to have real critical discussions on valuation.

Did TWLO or SQ or ANET or any previously/recently held “Saul” stock reach their TAMs that were touted in the past 2-3 years?

What about TTD…best stock investment I had from 2018-2019, and depending on how you did the math, their TAM could be $100’s of billions. Do I invest in TTD based on if they can get to that TAM?

I sold TTD at $265 after the new year started (to push out my tax bill another 12 months). I didn’t know virus was coming…I just saw a higher than typical valuation/multiple as they had moved dramatically from $50ish in early 2018 to $265-300 in late 2019. Stock price grew much faster than revenue or profit could be expected to grow.

With ZM, if they get to $2.5b annual revenue in two years, you need at least a 20 P/S to get a decent (by Saul standards) CAGR over that time of 25%. It will be a $50b mkt cap. Assuming Covid largely figured out in 6 months (just a guess) that leaves 18 months for the stock to not collapse under the return of “business as usual”. With short memories, many forget that 10 was once an expensive P/S…then 15, then SHOP was shocking at about 24 or so in 2018 I believe. Then we started handing out 30 P/S like candy to ZS, or Slack or any new IPO. ZM has stayed in the stratosphere…DDOG has held the 30’s…CRWD has fallen into 20s. Things change, and the assumption that ZM can/should command a P/S above 20 for years should not be taken as a given, imo.

All of this in a highly competitive market with fairly low switching costs. Maybe higher switching costs on WebEx/Teams side of things, depending on the enterprise agreements in place.

Look…maybe ZM goes to a $100b mkt cap. But if it does, this is purely a momentum play. Investors aren’t piling in because of well-reasoned metric analysis ala Saul…it is momentum-driven, and momentum can end.

I would maybe just recommend a pare-as-you-go strategy. But I will freely admit I don’t have Saul’s history, and I can’t until I am in my 80s myself. But it is safe to say that Saul has never owned a stock with a P/S and mkt cap like this in previous years of success. So this is new territory.

My last comment on ZM…I promise. It is just hard for me to read all the comments about how Zoom has taken over and is destroying all competition, when my every day reality doesn’t reflect that, and my career is in selling IT hw/sw/services solutions to med/large/global companies.

But I also am not, nor never really was ever in SHOP for the same reason…with a largely SMB-focused model, it wasn’t a world I could speak well to.

I am certainly not doing well the past 2 weeks, so I am not speaking from an air of superior returns. But much like when discussions of Arista and Nutanix popped up in previous years, I felt compelled to contribute because it is something I see (or don’t see) in my work and I wanted to be more than a lurker that never provides input.

If ZM was unfortunate enough to have IPOd in late 2019 when growth was down, I may have been all over it. It IPOd high and stayed high, so I never bit.

Dreamer

[RaptorD2]

Dreamer - spare us your sanctimonious lectures on echo chambers. Most on this board rallied hard AGAINST Saul’s pick of Red Violet. So your point is both insulting and objectively wrong.

Does anyone wonder why so many are reluctant to post here, or lurk for years before getting up the courage to make their first-ever post? In my opinion, your comment was so unnecessary and uncalled for, BWD, and goes against every goal of TMF’s mantra of amuse, educate and enrich. (Not sure, did I get that right?)

This is a great board and a powerful resource, and I am very grateful for it, but it ain’t perfect, and perhaps your post could be the poster for what could be improved.

Point 1: Look at all the hot, former stocks-of-the-day have crashed and burned, which is typical of many stocks no matter who found, “chose” or vetted them.* What we needed then, was for “opposing” data and evidence to be introduced on the board. But when a potential poster knows that this is how he will be treated if he disagrees with board consensus, much potential disagreement is silenced, and many followers are left drifting with the tide until someone with authority sees some potential negative aspect of the company and speaks up publicly about it. This is especially true of investors with less experience who don’t have the time of skill to judge these things for themselves. But to some degree, it affects all of us.

*No, this is certainly not Saul’s (or anyone’s) fault; it is to be EXPECTED. No one knows the future nor bats 1,000; look at Buffett’s critics over the last decade! But my belief is that while much of the value of the board is due to Saul’s uncanny market spidey-sense, his ability to see patterns in financial data and stretch it into the future (well done, by the way), and his desire to share his knowledge, that a huge, remaining portion of the value of the board is due to the intelligent, free exchange of ideas and opinions here. So in my opinion ONLY, for the board to reach its utmost possible potential, this free exchange should never be discouraged or worse, banned.

But this is just my opinion, and I while I don’t understand the vitriol you dispel in this post, I fully respect your right to your view. Is it too much to ask for you to do the same for me and others?

Point 2: Agreed, “echo chamber” wasn’t necessary either. (but perhaps not a novel thought for this or any board?)

Be well, everyone. And if it’s within you power, please be kind.

Dan

[MacDaddy1158]

I have been in Enterprise Software Sales for the last 20 years and have worked with many of the largest companies in the US. I really don’t like this space, because I have personally found all of them to be frustrating to use and almost always leads to some unease when starting our meetings. I have no position in either Zoom or Slack. I will also add like most of these posts of individual accounts are anecdotal, Saul’s continued insistence on focusing on the numbers is what has attracted me to this board. As an example, here are my counter anecdotal experiences:

Teams usage is up.
https://www.zdnet.com/article/microsoft-teams-usage-up-by-12…

Currently I have 4 Web Clients installed on my laptop to accommodate for web conference meetings over the last 6 months, Teams, WebEx, Chimes (Amazon) and Slack. I have not used Zoom in the last 6 months. My meetings span medium size enterprises across the US.

Talked to a GM at one of the largest Airlines, due to their challenges these days they are consolidating tools and are in the processes of unplugging both Zoom and Slack for Teams.

Lastly, I am a former Microsoft Enterprise Sales person, don’t under estimate the ability of a Microsoft rep to ram software down an Enterprises throat. I personally sold O365 to 7 Enterprises, you would recognize their names and those companies never had the intention of using it when I sold it. 4 years later everyone has converted over.

Long: CRWD, MDB, AYX, DDOG

[PaulWBryant]

I will get off the subject, as I just don’t see people wanting to have real critical discussions on valuation.

Do you see how a comment like that can sound like an Eeyore-esque “woe is me – no one listens to me” type of complaint? You’re not the only one who does it, but I wish people would stop! Everyone is welcome to discuss growth companies on this board. Period.

Look…maybe ZM goes to a $100b mkt cap. But if it does, this is purely a momentum play. Investors aren’t piling in because of well-reasoned metric analysis ala Saul…it is momentum-driven, and momentum can end.

How do you define a “momentum play?” A lot of people would say Netflix was at $20 billion about 5 years ago. I probably said it myself. But now it stands at 150 billion or so. I still think it’s overvalued. But it’s obviously worth a lot more than 20 billion. I just couldn’t see it at the time.

I know Netflix and Amazon are outliers, but I think a lot of people believe Zoom is, too. I’m starting to believe it myself. If that means to you that it is a momentum play, I disagree. I think it might be a stock that just always “seems” over-valued to folks like you and me. But maybe ESTC is one that will always seem undervalued. Not everything reverts to a mean PS ratio.

Just some thoughts. I actually like discussing this.

Bear

[PaulWBryant]

Ok. I will mention that in my reply to the angry emails I get from posters that are concerned if I (or anyone) questions Saul, that he will get angry and take his ball and go home, and then they wouldn’t be able to just copy his moves while lurking in background and contributing nothing.

As an assistant board manager I implore people not to send emails like that.

I also implore you Dreamer and others to recognize these angry emailers are wrong. Saul has never, ever, asked not to be questioned. Personally I think he likes arguing! But there has never been any authoritarian nature to this board other than the one dreamed up by those who don’t feel they fit in here. Saul (and we who frequent and to some extent “lead” this place) welcome different opinions and even arguments. We’re here to DISCUSS growth stocks. This is Saul’s Investing DISCUSSIONS. Not Saul’s Unquestionable Edicts.

Bear

[draj]

Some say Zoom is overvalued and it might be so for the moment. Recent news and increasing usage imply to me that ther is a massive latent market

[draj]

Some say Zoom is overvalued and it might be so for the moment. Recent news and increasing usage that I am aware of imply to me that there is a massive latent market which will become manifest in the next few quarters. So in my view the current run up is anticipatory of great things to come.

[tdonb]

Anecdotal evidence: they have shut down music schools here, and I got an email this morning that my son’s class would happen online. We downloaded zoom and used it. It was so easy it made me wonder why we have been driving over to his music classes for years. I hope they keep using zoom after this is over. My daughter has her class tomorrow.

[Rubenslash]

Anecdotal evidence: they have shut down music schools here, and I got an email this morning that my son’s class would happen online. We downloaded zoom and used it. It was so easy it made me wonder why we have been driving over to his music classes for years. I hope they keep using zoom after this is over. My daughter has her class tomorrow.

Many people here seem to forget that in the end, people like personal contact and don’t want to stay in their home 24/7. It would drive me completely nuts if I were still a student and had to follow classes, music school etc through Zoom instead of in real-life.

Not saying Zoom is a bad stock, just don’t believe that many of these things will be permanent due to the nature of humans.

[Texmex]

Looks like TEAMs is doing well to

Microsoft Teams adds 12M DAUs in a week https://seekingalpha.com/news/3553361?source=ansh $MSFT, $WORK, $ZM

[CRE123]

Another anecdote:

My company recently switched to Zoom. All of the services besides phone have been working well. Placing and receiving calls has been spotty. All of the videoconferencing and chat features are working.

My understanding is the issue is due to the overwhelming number of new users on the platform.

Side bar: We’ve also had issue accessing network drives due to ZScaler

[GDavenport]

I think all of these systems are getting stressed. The MF24HR call had a giant banner warning of high volume and heavy service requests. There were no issues while I was on the call save some of the presenters having poor resolution due to internet connectivity on their end. I was on the line during peak evening demand.

I have been using skype for business through work. Today I couldn’t connect through on the call in line on several occasions, but, I had no difficulty using the desktop application which also presents voice and screen sharing. (We did not/have not video shared, here)

I agree that free use does not equal monetization. They are setting the hook right now. We are buying before seeing how many fish make it into the boat, if we add before the quarterly reports.

[Darthtaco]

In a matter of days Zoom has become an indispensable household name. Video communication may not be new technology but it IS new technology for most people. At least for the accomplishment of everyday things like going to school, conducting work, exercising, on and on.

Zoom has taken over my home now. 3 kids. School’s been on Google Classroom forever with every student using Chrome Books. Today was first day of the new remote learning. Zoom integrates with Google Classroom quite nicely. A few minutes before class the kids got a zoom meeting notice on Hangouts and in mere moments on 3 computers (2 chrome books and a desktop) class was in session. Materials and assignments easily shared. Rather astonishing. I can’t imagine it working like that on other technology like Webex or Skype. And no one was expecting Zoom, no advance notice.

The video conferencing wasn’t a long period or anything but all their friends were there. I’m grateful that we have something like Zoom in a time like this. Give a little sense of normalcy to these trying times. The kids need that and a lot of us will probably be using Zoom in many new and creative ways in the days ahead and beyond.

It was always the thesis about Zoom, just never imagined it would happen so quickly and so dominantly.

Darth