How Much Is Zoom Worth? Zoom’s Net Worth Climbs in 2020
If you’ve used a Zoom video conference during the coronavirus pandemic, you’re not alone. The company’s value has absolutely exploded in 2020 — according to its market capitalization. Zoom’s share price has followed suit, jumping more than six times its price at the beginning of the year.
Zoom’s business model is to bring people and businesses together via online video conferencing. Whether or not the pandemic persists, the rise in work-from-home employment will likely continue to make Zoom a popular option.
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?
The coronavirus pandemic has created hardship for many companies and individuals, but not for Zoom. In fact, the pandemic has worked to the company’s advantage. Over the past 52 weeks, Zoom’s share price has reached stratospheric levels.
From a 52-week low of $62.02, Zoom’s share price reached a high of $588.84 in 2020, although it settled back down to $460.91 by the end of October. This put the company’s market capitalization over $131 billion as of the same date. Market pundits use this figure to express how much a company is worth.
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 299 million shares outstanding, so 299 million times the closing stock price of $460.91 on Oct. 30 equals about $137.81 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 Market Cap Range
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: $62.02-$588.84
As a result, Zoom’s market cap over that same period has also fluctuated in this range:
Market cap range: $18,543,980,000 – $176,063,160,000
With such a wide fluctuation in share price, Zoom’s market cap has also been extremely variable.
What is Zoom’s Net Worth?
In its simplest form, net worth is simply a company’s assets minus its liabilities. As of the quarter ending July 31, 2020, Zoom has a market valuation at $1.2 billion.
|What Is Zoom Worth Now?|
|Share Price, 52-week range||$62.02-$588.84|
|Market Cap, 52-week range||$18,543,980,000-$176,063,160,000|
|Fiscal Year 2019 Revenue||$622.7 million|
|Fiscal Year 2019 Profit||$21.7 million|
|GOBankingRates’ Evaluation of Zoom Net Worth||$1,040,743,333|
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 $1,040,743,333.
Founder: Eric S. Yuan Net Worth
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 $19.8 billion as of Nov. 3.
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.
Here are some of the earnings highlights from Zoom’s second quarter for the fiscal year 2021, ending July 31, 2020:
- Total revenue jumped 355%, to $663.5 million
- Number of customers contributing at least $100,000 in revenue rose 112%
- Net income rose to $185.7 million, up from $5.5 million the prior year
For the company’s most recent year-end, Jan. 31, 2020, the company reported annual revenue of $623 million.
Current Top Shareholders
The top 10 shareholders of Zoom stock are all asset managers/mutual fund companies. As a group, institutional and mutual fund shareholders own 55.04% of all Zoom shares. Individual holders only own 3.32% of Zoom stock. Here’s what the top shareholders list looks like:
Zoom’s Top 10 Shareholders
- Morgan Stanley Investment Management, 5.24% of shares
- The Vanguard Group, 5.18% of shares
- Renaissance Technologies LLC, 3.73% of shares
- Hillhouse Capital Advisors Ltd., 3.52% of shares
- Baillie Gifford & Co., 3.42% of shares
- Artisan Partners LP, 2.29% of shares
- Morgan Stanley Asia Ltd. (Investment Management), 2.08% of shares
- BlackRock Fund Advisors, 1.73% of shares
- SSgA Funds Management, Inc., 1.38% of shares
- Coatue Management LLC, 1.30% 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 currently such 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 it may not see another year like 2020 again soon. The massive changes in how business is done — and in how families meet — have played right into the hands of Zoom’s business model.
However, assuming the pandemic eventually passes, Zoom’s growth rate may not be quite as exponential. Of course, this is still a company that was growing its revenue rapidly even before the pandemic.
Will It Still Be a Buy?
Analysts are still bullish on Zoom, with eight analysts maintaining a “buy” rating on the stock. Their composite price target is just $477.67 per share, however, implying that the huge gains in Zoom’s stock may taper off for the moment.
This doesn’t mean that Zoom’s best days are necessarily behind it. The shift towards 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?
Zoom has been a great bet in 2020, but it’s hard to say that a stock that has rallied from $62 per share to its current price of about $460 is a “value.” The share price may need to drop a bit before investors rush back in. With an average consensus stock target just 3-4% above current prices, the volatility in the stock may outweigh the current upside.
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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