Zoom (Nasdaq: ZM) is overvalued, target price: $60

Recommendation:STRONG SELL
Price Target: $60

It’s 2020, but it might just as well be 1999. Zoom is a classic dot-com bubble company, trading at an incredible PE ratio of over $1400. For comparison, Apple PE ratio is 20. What did Zoom do to deserve this incredible valuation? Does Zoom have some kind of super exclusive technology or assets? No. Zoom is simply a conference app, one of several on the market. It’s competitors include Skype and Cisco.

It’s revenue for the last quarter was $188M, and net income was $25M. At these numbers, Zoom has an incredible market cap of $34B, more than General Motors or Ford! The issue with Zoom aren’t even its weak revenue and net income numbers, but its lack of potential. These figures could be overlooked for a company like Ebay or Amazon, which held market-leading positions with little competition back in the 90s. With the current technological landscape, it’s much easier and cheaper to bring products to market and Zoom can expect a lot of competition in this field.