Will Zoom Video Communications Be a Trillion-Dollar Stock by 2030?
Zoom Video Communications (NASDAQ: ZM) is coming off of an epic year of triple-digit-percentage sales growth and has been catapulted into global consciousness by the COVID-19 pandemic. But now more than one year removed from the start of the global health crisis, the Zoom boom is over. Already with an enterprise value (market cap minus cash and equivalents) of $110 billion (compared to less than $20 billion at the start of 2020), Zoom stock reaching $1 trillion by 2030 -- a tenfold total return, or an average compound annual growth rate of about 26% -- might seem like a longshot.
However, Zoom is disrupting a massive global communications industry, and as a cloud software business, it has additional capabilities it could unlock that a traditional telecom business cannot. Don't write off the possibility of this stock delivering another tenfold return in the next decade.
When it comes to valuation, Zoom carries a premium price tag in all respects. Even down 34% from all-time highs reached last autumn, shares trade for 73 times trailing-12-month free cash flow and 28 times expected current year sales. In fact, not only is Zoom trading for several decades' worth of current annual revenue, it's also valued for many multiples more than total global annual spending on video conferencing services. Various estimates expect global spend on internet-based video communications to reach $50 billion or so a year, but not until 2026.
Source Fool.com
