Zoom Video Communications (ZM) was one of the hottest stocks in the early days of the pandemic – but not anymore.
Shares have fallen 38% from year to date. In the last 12 months, they have decreased by 68%.
But Katie Wood of Invest Ark sees a glorious revival in the not-too-distant future.
“According to ARK’s research and open source model, Zoom’s share price could approach $ 1,500, with an annual growth rate of 76% in 2026,” Wood’s team wrote in a research report last year. week.
Given that Zoom shares are trading at $ 110 per share at the moment, the projection suggests a possible uptrend 1.263%.
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Hybrid work has come to stay
When the meetings and lessons were spread online due to the pandemic, Zoom’s business flourished.
But as the economy reopened and employees began to return to the office, there were concerns about the development potential of this video company.
Ark Invest, however, does not see the hybrid work environment disappearing.
“Although the perceived decline in the severity of COVID-19 has led many companies to reopen their offices and return 100% office orders, which has reduced the penetration of hybrid / remote work models to 66%, we believe that the response of knowledge workers and talent shortages will force employers to adopt more flexible arrangements ”.
Ark Invest predicts that by 2026, 75% of all knowledge-based workers worldwide will participate in hybrid / remote work models, up from 51% in 2021.
As one of the leading providers of video communication software, Zoom stands firm on this trend.
Ark Invest’s average forecast indicates that the number of Zoom users will grow at a compound annual rate of 7%, from 212 million to 291 million by 2026. At the same time, the company sees a significant improvement in Zoom’s ability to generate revenue from its user base. of.
“Our average forecast assumes that the majority of Zoom users are corporate customers and that 50% of the total Zoom user base pays by 2026.”
That $ 1,500 is the expected value of Zoom shares based on Ark simulations, but it’s not the only number worth noting. Ark Invest also provided bull and bear scripts for the company.
Based on Ark’s Monte Carlo analysis, there is a 25% chance that Zoom could be worth $ 700 per share or less and a 25% chance that it could be worth $ 2,000 per share or more in 2026.
Considering where Zoom shares are currently trading, even the downside scenario means a lot going up.
He is not the only bull on the road
Ark Invest’s upward appeal to Zoom is reflected in its holdings.
At the time of writing, Zoom is the largest shareholder in Ark’s flagship Ark Innovation ETF (ARKK), accounting for 10.2% of the mutual fund. It is also the No. 1 participation in the Ark Next Generation Internet ETF (ARKW) with a weight of 8.7%.
But Ark Invest is not the only company that sees potential in the company.
Last month, Morgan Stanley analyst Meta Marshall reiterated an “overweight” rating on Zoom, saying Zoom is “a name investors should look hard for for a reason not to own.” Marshall’s $ 140 price target is about 24% above where the stock is currently.
RBC Capital Markets analyst Rishi Jaluria, meanwhile, has a Zoom “outperformance” rating and a price target of $ 150.
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This article provides information only and should not be construed as advice. It is provided without any guarantee.