No. of Recommendations: 2
Saul recently wrote about a thought experiment where Zscaler climbed to a valuation of 100x sales.
We have a real life scenario in ZM to think about today. It may not parallel Saul’s experiment exactly as none of us have ever had the chance to buy Zoom at a lower valuation. But it is worth considering.

Would you buy Zoom at 49x sales? I haven’t crunched the numbers but did read that number here.

https://www.marketwatch.com/story/zoom-video-rockets-to-nose...

Now, if Zoom doubles sales this year, the valuation will halve assuming no stock price movement and ignoring dilution.

Based on the metrics I’ve seen, I can certainly see why they are valued higher than everyone else. We are halfway to a theoretical 100x sales here. I can’t see a ton of alpha at this point, but still reserve the right to change my mind. 49x sales just seems too lofty.

A.J.
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