Where Next For Shares of Zoom Video (NASDAQ: ZM)

It’s been a year to remember for investors of Zoom Video (NASDAQ: ZM). Those who were getting into the stock this time last year and have had the disciple to let their positions run are looking at triple digit percentage returns. Shares have continued gone from strength to strength and defied the laws of physics in many ways.

As the coronavirus wave began to crash into markets and economies towards the end of January, very few stocks were still able to put together consistent up days. Investors’ flight from equities to the safe havens of gold and treasuries only intensified into March but Zoom was at least one stock that was able to shine a bright green in a sea of red during those weeks. For context, Zoom traded at its 2020 low on the 6th day of January. It hasn’t looked back since. While other behemoths and titans were looking at 30%, 40% and even worse drops in March, Zoom shares became a safe haven in their own right.

Slam Dunk Winner

Subsequent earnings reports from the company have only served to confirm the seismic shift underway in how companies will conduct business. Thanks to COVID and the corporate move to working-from-home, wide scale video conferencing is at a point that many thought would probably take years to get to and it’s certainly here to stay.

Based on recent momentum and headlines, it looks as if those investors still holding could soon have 4 digit percentage returns to talk about. Which means there’s a ton of reasons new investors should consider too.

On Thursday, Bernstein upped their price target to $661 which implies about a 20% move from Wednesday’s close. The 5% jump in shares in yesterday’s session has already gone some way to eating into that target. Analyst Zane Chrane thinks Zoom has only reached about 1% of its potential user base, an amazing stat that is sure to have bulls frothing at the mouth. And on top of that, if they play their cards right, there’s the potential for them to add more than $1.5 billion in annual recurring revenue in the next 12 months.

We can only assume that Chrane was impressed by the company’s Zoomtopia event from earlier this week, where they showcased new features such as Zoom Rooms and the Zoom Phone. RBC were also impressed with the showing as they raised their price target to $600 after the event and noted that any concerns about competition from Microsoft’s (NASDAQ: MSFT) Teams product can be put to bed for now. Zoomtopia ticked a number of boxes for them, and in particular "increased conviction in the potential for durable hyper-growth, with a potential path to 60% growth next year."

Getting Involved

While there is a ton of bullish momentum and enthusiasm, it’s worth noting that there are some who aren’t totally convinced about the bull case in the near term. Rosenblatt reiterated their neutral position this week  while raising their price target to an ultra-conservative, and almost bearish, $450. Their core concerns stem from “significant execution risk” as well as the company’s dependence on small businesses. Any volatility or slump in the economy opens Zoom up to higher than ideal churn numbers.

Still, it’s Zoom’s to lose at this point as they’ve become a household name and the standard that all video conferencing products will be judged against. While many of us may be kicking ourselves for not buying in earlier or for booking profits too soon, it’s fair to say there’s still more reasons to get long than there are to short Zoom right now.

Only earlier this week, the company increased their forecasts for incoming operating margins and there’s every reason for investors to increase their forecasts for the future share price.