No. of Recommendations: 12
Update with ZM CC Slide Deck Presentation here:

https://seekingalpha.com/article/4310934-zoom-video-communic...

Its impossible to go through the slide deck and not be overly impressed by both what ZM is accomplishing and its long runway TAM ahead of it. So why - after such a great report is the stock selling off? For what its worth I think there are two basic reasons:

1) As I mentioned earlier, Zoom's valuation has always been something of a white elephant in the room. You can discuss it all you like - both pros and cons - but at the end of the discussion you still have nosebleed, sky-high, Holy Bat Signal Valuation. It is what it is.

2) If you look at the Guidance for Q4 it calls for revenue between $175M to $176M. Not much of a spread. If they were to hit the $176M it would represent Rev Growth of about 66% over Q4 2019. Any way you look at that number it represents entirely reach-for-the-tums really big, pump the breaks slow down from this reports 85%. Moreover, Sherlockian deduction has to conclude that - combined with valuation - this perceived and self inflicted wound is entirely why the stock sold off in After Hours. All of this with one massive caveat: that there was no wringing of hands, woe is us, Chicken Little moment on a conference call.

Now - for what its worth - which is surprisingly little, absolutely none of us heavy hitter, whale sized growth investing stalwarts think for one moment that ZM is being serious. No...they will beat the $176M number.. or.. worse selloffs are in our future. But the question is....by how much? By how much can we realistically expect them to beat the measly $176M guidance? Well, lets see.

In their three public ER's they have Beaten on Revenue by 9.2%; 11.7%, and today 6.6%. By using the top secret MGoose WAG formula designed entirely for these sorts of fishing expeditions I am projecting that Q4 Revenue will come in at between $192M to $196M - I base this largely on not only historical analysis but a great deal of smoke and mirrors forecasting. BUT - that does not mean I am wrong. (There are a great many other reasons I could be wrong and I wouldn't trust a word of this if I were you!)

So - assuming my pie in the sky forecast is only semi-accurate and they hit $190M in Revenue it would represent growth of about 80%. Slowing - but slowing slightly and gradually and unlikely to spook the head - especially from the brand new lower valuation base we now find ourselves at. Now...let say they hit my high end at $196M...why that would just be dandy and equal to Revenue Growth of 85.9%. But AHAAAAA...I don't expect them to hit the high end but to come in somewhere in between that and the low projection representing Revenue Growth for the 4th QTR of anywhere between 80 - 83.5%.

Note 2: You should develop your own forecasting model and you too could become an icon of investing wisdom - or - you could just wire me $15 for my How-I-did-it-and-How-you-can-to Guide to stock forecasting riches. Its a short guide of only 7 pages but jam packed with hand drawn diagrams and clipped pirated illustrations and amusing antidotes.

Anyway - thats what I think will happen.

Happy Holidays
....and....
All the Best,
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.