Excellent point, and one that I was considering this morning.
ZM is safe. Here is one example of why. Higher education, and primary education for that matter, has seen the light. Universities are expensive to maintain. Like we see with our SAAS companies, online education boasts much larger profit margins (if it’s appropriate to call it that). Best part, though, is that you broaden your applicant pool to the entire world, potentially, instead of just a narrow geographic region. And not just student applicant either; now you can hire exceptional faculty/instructors that otherwise wouldn’t have been willing to move.
TDOC is safe. I’m not suggesting it is the best place to put investment dollars to work, but I firmly believe that it has a commanding lead in the future of ordinary medicine and the behavioral treatment of chronic conditions. Who wants to take time off work and sit in a waiting room to just to be verbally interviewed.
PTON is an interesting case. Why might customers still flock to PTON when gyms are back in full force? The top reason that people exercise is to lose or maintain weight. Easiest solution is to exercise and eat fewer and better calories. And exercise doesn’t need to be extravagant; the best exercise for weight loss turns out to be walking. Sure you would burn more calories per minute running, but for the average person trying to lose weight they might only be able to run for a few minutes before fatigue. Therefore, walking for a longer time burns more total calories than running (on average). So, why with such easy and inexpensive solutions like diet and exercise is weight loss a trillion dollar industry? People need motivation and they need a plan. They think to themselves, “I don’t feel motivated to get up extra early, drive to the gym, exercise for a bit, shower at the facility, and go to work. But if I had a bike in the house, and a trainer leading me through a workout, and less time wasted driving, and the ability to shower at home, and an online community to support my efforts, I think I might actually stick to a routine this time.”
Interestingly, all three of these were excelling before the pandemic. Last year’s revenue growth for the three was 88% for ZM, 32% for TDOC (128% for the LVGO component, I believe) and 99.6% for PTON.
Multiples and growth may be temporarily distorted by the pandemic. But these three were pre-pandemic winners so they might be expected to continue their winning ways post-pandemic.