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.

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.

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