If you’ve used a Zoom video conference since the beginning of the coronavirus pandemic, you’re not alone. The company’s value absolutely exploded in 2020, according to its market capitalization. Zoom’s share price followed suit, jumping to a high closing price of $559 in October 2020, more than eight times its price at the beginning of that year. But the stock price has declined significantly since then, and with it, Zoom’s worth.
Zoom’s business model is to bring people and businesses together via online video conferencing. Even as people return to work and the classroom, the rise in work-from-home employment will likely continue to make Zoom a popular option. What that looks like in terms of the company’s value, however, remains to be seen.
To see how much Zoom is worth, take a look at this snapshot of the company’s current state, along with a discussion of the company’s history, value and future outlook.
|Zoom: Company Snapshot|
|Headquarters||San Jose, Calif.|
|Founder||Eric S. Yuan|
|CEO||Eric S. Yuan|
How Much Is Zoom Worth Now?
Pandemic shutdowns created hardship for many companies and individuals, but not for Zoom. In fact, the pandemic has worked to the company’s advantage, driving Zoom’s share price to stratospheric levels in 2020.
From a low of $73.09 on Jan. 6, 2020, Zoom’s share price reached a high closing price of $559 on Oct. 12, 2020, before settling down to $337.32 by the end of the year. The price has dropped considerably since then, to just over $108 on March 8.
What Is Market Capitalization?
Market capitalization is simply the number of outstanding stock shares a company has issued times its current market price.
So, for example, if a company has issued 1 million shares of stock and its share price is $50, the company has a market capitalization of $50 million. Zoom currently has 242.24 million shares outstanding, so 242.24 million times the closing stock price of $108.48 on March 8 equals about $32.288 billion.
Market cap does have its drawbacks as an evaluation method, however. For starters, market cap changes frequently, and it’s closely tied to the company’s current share price. It doesn’t take into account any of the direct financial metrics of the company, such as earnings per share, growth rate or book value.
By way of comparison, the price/earnings ratio, which is another popular valuation method, is also closely tied to a company’s market share price. The P/E ratio also relies heavily on a company’s earnings, which some investors feel is a more important determinant of a company’s valuation. Zoom’s current P/E ratio is 24.07.
Zoom’s Market Cap
Zoom’s market cap varies from moment to moment based primarily on its share price. Although an increase in outstanding shares could also increase its market cap, that type of change occurs far less frequently than a change in share price, which can occur in less than one second. Here is Zoom’s share price range over the past 52 weeks:
Share price: $175.27-$451.77
With such a wide fluctuation in share price, Zoom’s market cap has also been extremely variable and currently sits at $32.288 billion.
What Is Zoom’s Net Worth?
In its simplest form, net worth is simply a company’s assets minus its liabilities. As of the end of Zoom’s fiscal year 2022, the company’s value was $5,780,018,000.
|What Is Zoom Worth Now?|
|Share Price, 52-Week Range||$175.27-$451.77|
|Fiscal Year 2022 Revenue||$4.1 billion|
|Fiscal Year 2022 Profit||$1.38 billion|
|GOBankingRates’ Evaluation of Zoom’s Net Worth||$10,464,433,000|
Of course, methods of determining the value of a company are wide and varied, each with its own merits and blind spots.
GOBankingRates uses company data to calculate net worth in a slightly different manner. The GOBankingRates company net worth is a calculation of a company’s worth based solely on concrete, measurable figures like assets and revenue. It’s a more conservative valuation than most, taking into account only full-year profits and revenue from the last three years and the company’s assets and debts.
By this GOBankingRates metric, Zoom’s net worth is currently over $10.46 billion.
Zoom’s Founder: Eric S. Yuan
Eric Yuan was born in China and moved to Silicon Valley in 1997. Formerly the engineer behind Cisco’s WebEx video-conferencing business, Yuan set out to create a product that was as adept at linking corporate boards across the world as it was uniting families over a laptop on a kitchen table.
According to Forbes, the Zoom founder’s net worth is $5.7 billion as of March 9.
Key Product Lines Contributing to Revenue
Zoom aims to make interpersonal communication easier and more fun via its cloud-based video conferencing platform. Particularly in the COVID-19 era, Zoom strives to bring business teams together so they can still get things done, even when they can’t be in the same physical location.
Users can access video, voice, content sharing and chat via the Zoom platform, which extends from desktops and telephones to mobile and room systems.
Zoom generates income from subscriptions to its products, with hosts paying to use the service. Additional revenue is generated from product sales, including Zoom Video Webinars, Zoom Phone and Zoom Rooms.
Zoom’s Top 10 Shareholders
The top 10 shareholders of Zoom stock are all asset managers or mutual fund companies. As a group, institutional and mutual fund shareholders own 64.06% of all Zoom shares. Here’s what the top shareholders list looks like:
- T. Rowe Price Associates Inc., 7.61% of shares
- The Vanguard Group, 5.41% of shares
- Morgan Stanley Investment Management, 5.19% of shares
- BlackRock Inc., 4.29% of shares
- Baillie Gifford & Co., 3.23% of shares
- ARK Investment Management LLC, 2.85% of shares
- Tiger Global Management, 2.53% of shares
- FMR LLC, 2.26% of shares
- State Street Corp., 1.97% of shares
- Sumitomo Mitsui Trust Holdings Inc., 1.76% of shares
All of these shareholders may change their level of investment at any time — even dropping it down to 0%. But since Zoom is a popular company, these percentages may not change by a great amount. This lack of change is particularly true for the index funds on the list, as by fund mandate, they are required to match the company’s weighting in their respective index.
How Does the Future Look for Zoom?
The future looks good for Zoom, but slowed growth — inevitable as businesses bring more employees back to offices — has cost shares over 75% of their value since the stock peaked in October 2020, according to CNBC. In its guidance for its 2023 fiscal year, which began Feb. 1, Zoom forecast revenue of $4.53 billion to $4.55 billion, falling short of the $4.71 billion predicted by analysts polled by Refinitiv. Shares fell in after-hours trading following the announcement and are currently down 41% since the beginning of the year.
However, the news wasn’t all bad. Zoom’s results beat analysts’ earnings and revenue estimates for the final quarter in its 2022 fiscal year. Adjusted earnings per share were $1.29 compared to $1.06 forecast by Refinitiv analysts, CNBC reported. Revenue increased 21%, to $1.07 billion compared to $1.05 billion predicted by analysts.
During pandemic shutdowns, massive changes in how business is done — and in how families meet — played right into the hands of Zoom’s business model.
However, as life returns to something closer to normal, Zoom’s continued success depends on expanding its high-value enterprise customer base and converting monthly subscribers to annual ones. Zoom increased its enterprise customers by 35% last year compared to the fiscal year 2021, and its trailing 12-month net expansion rate for enterprise customers was 130%.
Zoom announced last year that it would launch the Zoom Video Engagement Center, a contact center solution, in early 2022. In its Q4 2022 earnings deck, Zoom noted that the total addressable call center market is $18 billion by 2024, citing data from Gartner.
Zoom also intends to capitalize on individual customers with free accounts. As GOBankingRates reported in November 2021, Zoom will display ads on the browser page these users see after they end their meetings.
The shift toward work from home may indeed become more of the norm, which would keep services like Zoom’s in constant demand going forward.
Is Zoom Worth the Money?
Analysts are somewhat bullish on Zoom, with the consensus among 33 analysts surveyed by Yahoo Finance rating the stock a “buy.” The analysts’ composite price target is $207.75, down from a target last quarter of $309.61, but up significantly from its closing price of $108.49 on March 8. With an average consensus stock target over 90% above current prices, the current price could indicate a significant value.
Zoom reported strong numbers in some important metrics for its 2022 fiscal year, which ended Jan. 31. Here are some highlights:
- Total revenue jumped 55%, to $4.1 billion, year over year
- Number of customers contributing at least $100,000 in revenue rose 149% year over year
- Net income rose to $490.5 million, up 88.38% from the prior year
Share price is just one of the variables you should consider when investing in a specific stock. Your financial situation plays a large part in determining whether or not you should invest in stocks at all — let alone invest in a specific stock like Zoom. Working with a fiduciary financial advisor is a good way to delineate your investment objectives, risk tolerance and personal financial situation to determine if investing in stocks is a good match for you.
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Daria Uhlig contributed to the reporting for this article.
Data is accurate as of March 9, 2022, and subject to change.
Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, plus 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.
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