Mid Tier Priced Cloud and eCommerce

If the gross margin is 68% and net margin is only 4% then something is very wrong!

Of course I am working from historical data as that is the only public data that we have but even using the estimated future revenues that you give we’re still nowhere near to generating the levels of profit (not revenue) to justify the market cap.

On $1.8bn revenue at current level of profit that is still only 72million profit! How is that gap going to be closed particularly when every free customer costs Zoom money.

I’m not saying that Zoom can’t make money it clearly can but it isn’t a Facebook/Google/Amazon/MS where there is clear revenue streams that justify high share price. Current analyst consensus is that Zoom is a hold (not a buy).

With all due respect , your comments give me the impression that you are not familiar with the SaaS model?

Sorry, but It is ridiculous to think Zoom net profit margin will be at 4% in 3 years time!

There is something called S&M and R&D expense that bridges the cap b/w gross and net profits - So there is nothing serious wrong b/w 68% gross margins and 4% net margins today as there is something called LTV /CAC which has been over 5! consistently for Zoom I.e each $ they spend today to acquire an enterprise customer they expect to generate $5 + over the same customers lifetime!!!
why will I not spend today when capital is cheap and I expect to get 5x + my money back on my initial expense!

I’m fully aware of Saas - thanks for the patronising comment.

I’m also aware of the lag between investment and outcomes but there is still a correlation and there needs to be a demonstrable pathway to narrow the gap between gross vs net profit. The best case scenario that you are arguing for is that in 202x Zoom could have revenue of 3 bn with a profit margin of 68% - that still only delivers 2bn in profit! So even if all profit was retained that would still take over 30 years to generate the current market cap.

If you are going on analyst recommendations there is presumably good reasons why the majority rank it as a hold rather than buy.

You can’t have it both ways ie claim that you follow the data but then ignore the data you don’t like!

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Yes 2bn is 2023 - the company will not disappear in 2023 unless it’s a total fraud !!!

As far as analyst ratings of buy/sell/hold are involved that’s their price expectation for next 12 months in their opinion it can not outperform the markets - if Zoom continues to execute as they have so far, I have no reason to doubt they will keep re-rating it and increasing price targets - you can go and see last 12 months if in doubt if how analysts kee raising their price targets - I was not ignoring the data I assumed that was so obvious!
Analyst rating of “hold” is not a reason for me to sell my stock today!

You expect 5 times your money back?

You expect Zooms market cap to raise x 5?!

@red
I admire your patience to debate. :slight_smile:
Something I have to learn and build upon.

Not sure if @student007 is in any shape or forum related to the actual business side, one small fact.

None of the companies listed in that sheet/portfolio is a dominant force in their respective market. They go against likes of IBM/MSFT/Broadcom/Oracle/Cisco etc.

So non can expect to monopoly or duopoly. In fact I could rather predict the best of breed from that list to be bought out by the big boys, if their product portfolio is any good in terms of market share/product dominance.

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Thank you v much for your input.

My portfolio returns and performance YTD speaks for itself.

I am not married to any of the stocks and only one thing matters which is profiting from the stock market - I will leave it to you guys to argue all day what is a cheap valuation and what is an expensive valuation! Have fun!
End of thread.

Cool :coffee: Enjoy mate

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How’s it going today my man? You get out?

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