The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
Ever since the COVID-19 pandemic began, Zoom Video Communications (NASDAQ: ZM) has gained tons of recognition overtime for its video conference services.
Not only were they able to achieve greater levels of popularity with their quickly offered responses to our newfound needs, but they also managed to catapult their performance numbers up to those worthy of a growth stock.
Of course, 2020 then saw Zoom rapidly becoming a must-have stock for most investors.
However, shareholders are now stunned, as the company’s recent stock prices have been declining. As of today, their shares have nearly halved from their all-time high price of $589, first attained last year.
As expected, many investors are now uncertain of what we could expect from Zoom’s future. Who wouldn’t?
So the question has to be asked.
Is it a call for a massive pullback from all investors? Or is it an opportunity for newer investors to introduce themselves as Zoom’s shareholders for a bargain price?
Zoom’s 2020 performance
Again, with people’s rising need to adapt to a virtual work environment, it came to no surprise that the pandemic resulted in a kick-start for Zoom to finally become a significant company.
For reference, its original forecast for last year’s fiscal period (which ended on January 31, 2021) had predicted revenue of in-between $905 million and $915 million.
In reality, they instead managed to reach a total revenue of $2.65 billion, representing a 326% increase from their previous fiscal period.
On the side, this also meant that Zoom’s profitability was rapidly improving over time, reaching a total net income of $671.5 million by the end of January.
Zoom’s current performance
Fast-forward a little in time. Nowadays, there are many practical efforts already underway to finally put an end to the pandemic. Likewise, many companies now offer tons of good pandemic-related services, which subsequently made them a worthy competitor for Zoom.
After recognizing this reality and Zoom’s declining numbers, a quick thought led investors to infer that the company’s time in the spotlight was ultimately coming to an end.
However, that’s coming out as an excessive overestimation as people are mistakenly comparing their year-based numbers with quarter-based numbers. Once some well-needed adjustments to these calculations are made, the outlook isn’t as bad as initially thought.
For this year’s fiscal quarter, Zoom’s actual prospects are looking at a revenue of in-between $900 million and $905 million, up from the $328 predicted for last year’s first fiscal quarter.
Take note of this. In just a quarter, they’re already expecting a revenue worth about the same as an entire pre-pandemic year.
Furthermore, this time Zoom’s looking at potential revenues of $3.76 billion to $3.78 billion in terms of fiscal years. Again, an increase of last year’s equivalent.
In reality, Zoom’s not performing poorly at all, as many first believed. Instead, it is as resilient as ever.
What’s next for investors?
While the pandemic indeed had a notable impact on Zoom’s growth overall, people tend to forget an essential part of their performance record.
Zoom was already on a path towards financial growth even before we had any knowledge regarding the COVID-19 virus, and a good one. The pandemic only ended up representing an opportunity to take the utmost advantage, with remarkable success after that.
So, we firmly believe that Zoom’s not truly dependent on this context to achieve success. In reality, the company’s just barely taking its very first steps into becoming an actual giant presence in its market.
When considering the place it’s currently at, that makes us excited about its future ventures.
In essence, we see this decrease in value as an excellent bargain for getting a hold of a great investment opportunity. One you should try your best to get your hands on if you’re currently looking for a long-term investment.