ZM - Is the Covid boomer gonna zoom zoom its way down?

[Noob_Dude]

I looked into a potential “bull” case for Zoom, specifically to learn more about the go-to-market strategy they have with Oracle. Here’s a bit of background regarding the Oracle / Zoom partnership:

In April 2020 it was announced that Zoom would run on Oracle Cloud. Prior to this announcement Zoom was running on AWS. It was considered a “shock” that Zoom would migrate their workload from AWS since Oracle Cloud was an industry laggard. Oracle and Zoom also announced shortly afterwards that Zoom would be included within Oracle’s unified communications as a service (UCaaS). Oracle needed a “win” to tout their cloud offering since it was not getting much attention. Zoom needed a partner to help get more traction in the Enterprise space. The press releases achieved a win for both companies.

I know a few people at both Zoom and Oracle that serve in sales, implementation and technical training roles. From what I’ve gathered none of them seem to be aware of any joint go-to-market. The sales personnel indicated there aren’t any spiffs. The implementation and technical trainers have said they’ve not been engaged in any joint projects. The more I dug into the Zoom and Oracle partnership, the less impressed I became with it. I believe they both needed each other but more for marketing purposes than actual go-to-market purposes.

One last note, I read an article from December 2020 that Zoom was still using AWS for most of their workload, Six months after Oracle trumpeted Zoom as a cloud customer, AWS says it is Zoom’s ‘preferred’ cloud • The Register

[Balu]

Love these updates my only worry is that zoom has acquired more government funded contracts which might make there earnings not as bad as we think but I am extremely bearish.

[Rpgeek]

This may be good news for Zoom.

[Esports_Psycho]

how is cisco missing earnings bad for zoom?

[Metzger_ME]

Bad? Good- Less network hardware demand probably means less Zoom meetings in terms of growth. Good connection @Rpgeek

[ZiggyBoom11B]

I work in government at the federal level and we are 100% MS teams. Zoom was used for a hot minute when the Covid shutdowns started but that got shutdown quick with their security issues

[Sunny2456]

Delays for their Cisco Meraki gear such as firewalls, switches, and access points are getting longer and longer for us which would lead to businesses either cancelling their orders, going with another vendor, or specifically moving to the cloud or our datacenter at work. From the beginning of the year, we saw orders less than a month out, but now fast forward to the end of the year and I’ve been waiting on an order for 2 months and once again they have pushed out the ship dates. What doesn’t help is their new X5 generation lineup that brings much requested 10gb ports and features which splits the types of chips they order for these devices.

Didn’t mean to wander off topic - The tech savvy clients are migrating to MSFT teams, but those are far and few in between. We are still seeing a high usage for zoom from general businesses. As long as it works for them, they aren’t looking to switch and our clientele are spanning multiple industries.

[Sunny2456]

I work in IT and have some town level clients and they are still on zoom and do board and commission meetings on zoom, however you are correct as the state level and higher utilizes teams heavily such as for the health districts, which is forcing me to purchase and set up teams licenses for users.

[Rpgeek]

The connection is that Cisco missed earnings in part because there has been a stable group that are staying at home and keeping to digital classes which helps zoom. It hurts Cisco because the on site campus tech isn’t needed. This is what I’ve read is one of the reasons for missing.

[rexxxar]

Very insightful, bud. Thank you.

[Venus]

Thanks bro, for the great DD, greatly appreciated it.

[Joshuke]

I had recently re entered into zoom puts after exiting with profit previously. Playing with a smaller position currently, 4 $200p 12/3 that I will most likely cut before earnings as IV increases.

[Tuanathans]

Hello, I am Tuanathans. I am a long-time lurker of the server and often talk in chat.
This is going to be my first DD ever. So please any guidance or such would be great!.

ZM is a pretty common household name due to Covid and there is no doubt about that. However, I believe their name is going to die down slowly. Their earnings are 11/22 and I believe it is going to be a knife down.

Their overall stats:

It has been overall decreasing slowly and it might not be a lot but they are waning

The insider trades are all sells and no recent buys. They themselves know ZM is indeed overvalued and are just selling away.

This is the most recent SEC filing and their CEO is selling. It’s actually pretty common how often they are selling.

It’s actually pretty regular for them to sell to.

There is reason and sentiment that ZM is going down.

If you would to have a look at the filings here it is.
https://www.nasdaq.com/market-activity/stocks/zm/sec-filings

This is from the google app store and its downtrending these are somewhat recent

Apple is also downtrending however these are also somewhat recent.

Zoom usage in countries is slowly also dying down as well.

Zoom security issues: What's gone wrong and what's been fixed

Zoom has a lot of potential securities and still has a long way to go to be the top communicating service and premiere app for big corporations. They have so-called fixed most of them however there are still possibilities of a security leak. They lost a lot of people because of the leaks and such last year. People are still skeptical and rather have something solid like Teams which is going to be integrated with Windows 11 which is a free upgrade and will be easy for any Windows 10 user to switch up too.

A lot of less interest in the overall google search of zoom as well.

There are also other things you can think about like the competitors such as Microsoft teams who are a tech giant and provide communication with security easily and easily has a better integration on workflow and such.

Now there are Cons and we do have to see if there is a bull case:
Zoom is already priced in
Zoom’s revenue is a subscription-based (monthly and annual) so revenue could have been locked in. Their usage is also not always based on volume or or usage from the web. Contracts can be set with them for a while and they are a household name.
The sentiment was already known that Zoom was going to be trash so they aren’t expecting that much (analyst)
Zoom knows their fame is based on Covid and is trying to go into other markets/ways to increase revenue and maintain their market value.
Zoom has also already downtrend a lot from their ATH. They could see bounceback even from the smallest glimpse of good news.

Conclusion: Overall I believe ZM will falter this Quarter and knife down. I am not a financial advisor and you should take what I think with a grain of salt. I will be taking put positions for ZM soon. I suggest just playing IV for ZM earnings if you’re skeptical as you will make money either way. If you have conviction with my post stay in. You can easily make money from the IV during earnings day. Remember nothing is a guarantee and stay skeptical at all times. Also ZM is 11/22 AH for anyone who doesn’t know. Godspeed.

[Conqueror]

@Tuanathans I’ve joined your DD with the posted DD from @Navi

I really appreciated the added contribution and it adds a lot of insight into how their customer base may be shrinking to some extent. Looking forward to more.

Adding to this, let’s take a look at ZM’s recent earnings performance:

So we can see that ZM has beat their last four earnings estimates on EPS & Revenue. They’re on a streak, however, if we look at the estimates for these earnings, there is somewhat of an issue brewing. The revenue estimate for this quarter is $1.02B… the same as their actual reported revenue for Q2.

I think this sets them up to fail. Most of the bull cases on ZM that I’ve heard is that they’ve “still got” their corporate contracts in all likelihood. Not many cases state that they’ve probably significantly added to them though. If this is the case, they are guaranteed to make less money this quarter than the quarter beforehand as the slow bleed of smaller accounts to Microsoft Teams coupled with the reduction in overall users of video conferencing software in the easing of Pandemic restrictions/lifestyle have undoubtedly reduced the overall size of their customer base to some extent.

So I think this presents a Peloton style opportunity where we’re going to run straight into the first bearish earnings of a company that owes it’s current market cap almost entirely to the Pandemic and I think there is a possibility that this is a catalyst for a correction. Analysts are also starting to signal this ahead of earnings:

But the message hasn’t received the rest of the market considering the whisper sits at $1.16 above an estimate of $1.09… which means that the miss we’re forecasting could be a major surprise… and that usually means major drop:

[Conqueror]

Zoom is apparently hiring “Winback Specialists” as of two weeks ago:

This newly formed team is charged with reclaiming business that may have lost its way away from us. Scheme, strategize, and smile-and-dial our wayward customers back home with us!

34,000+ Renewal Manager jobs in United States (1,528 new)

[Conqueror]

Comparison of ZM vs PTON daily trend since Pandemic heading into earnings.

https://twitter.com/alphatrends/status/1461778855048491013?s=20

[asifp82]

I am in!

I am not sure if it drops as hard as pton, those guys were screwed from so many angles

Here if zoom shows slowing growth ans reduced customer base it will tank hard but they will find soke support unlike pton where the floor just fell off

[ToshioMagic]

Those puts are expensive. If you’re playing, beware IV crush.

[juangomez053]

Some relevant info I found today.

From what I can see, users are declining or not using zoom as much, job openings are rising. This could be from the overall exit from the workforce but still bearish overall.

[VictoriousSecrt]

FWIW, I work for one of the large banks and we are switching from zoom to MS Teams.