ARK Invest Zoom Forecast

ARK Invest sees Zoom as a critical tool for maintaining work and social connections after the pandemic forced people to reimagine their daily lives. Any cloud-based video conferencing application had the potential to fill this role. ARK Invest points to several reasons that investors should choose Zoom over other options:

• Zoom commands nearly half of the global videoconferencing market share.
• Google Meet and Microsoft Team, two of its most prominent competitors, only have 22% and 15% market share, respectively.

Some analysts might assume that Zoom has reached this level of success by beating competitors to market or offering discounted rates that attract clients struggling to find new ways to operate during a pandemic.

A closer look at the numbers, however, shows that Zoom stays ahead by providing a service that consumers and businesses prefer. Zoom has more 5-star reviews than its competitors. It can handle the massive bandwidth requirements of millions of users simultaneously and still provide service fidelity.

Is Zoom Winning Because It’s Cheaper?

It’s unlikely that discounted prices account for the higher adoption rate of Zoom vs competitors.

Microsoft, Google, and similar communications solutions have free tiers. Instead, it seems that Zoom’s growth was driven by business leaders who trusted the application’s exceptional technology.

They were looking for a solution that would let them conduct business without meeting face-to-face with their teams. They chose Zoom because the product filled a new, essential role in business operations. It could be trusted to deliver high fidelity service across organizations of all sizes.

Because of this and other factors that make Zoom successful (such as choosing to purchase the Contact Center as a Service company, Five9), ARK Invest projects tremendous growth over the next few years. In 2021, Zoom’s Total Enterprise Value was approximately $75 billion.

At 25% enterprise penetration, ARK Invest predicts a value nearing $450 billion by 2026.

Zoom: The Fabric Connecting Enterprises

According to ARK Invest analysts, Zoom is the fabric connecting enterprises. While individuals might choose to use a variety of video communication apps, they play a rather small role in how much money these companies make.

In fact, most casual users rarely have strong feelings about the communication apps they use. If someone else sets up a virtual room, they’ll log in and participate. They might have a favorite, but they simply don’t care that much.

The real measure of success comes from the decision of enterprise clients to adopt Zoom. Large organizations are willing to spend significant amounts of money to improve operations. So far, Zoom stands out as their best option because it provides diverse features for conversations and presentations.

Some of the features that make Zoom attractive to enterprise clients include:

• Vanity URLs that can include the organization’s name or meeting name.
• Breakout rooms where some individuals can work independently of the larger group.
• Direct sharing with sharing codes and ultrasonic proximity signals.
• Companion whiteboard with sharing options.
• Send and receive files from several storage services, including Google Drive, OneDrive, and Dropbox.
• Video mirroring.
• High-quality 1080p video.
• Multiple camera support.
• Easy recording for future review and cataloging.
• In-meeting chat.
• Live transcriptions, closed captioning, and manual closed captioning.
• Add watermark to videos.
• Support for dual and triple screens.
• Numerous integrations (Amazon Alexa, Voxbox, Revolabs, Polycom Trio 8800, etc.).
• Allows participants to join from third-party applications (Webex, Google Meet, Skype, etc.)
• AES-256 GCM encryption.
• Password-protected meetings.

The average person rarely cares about these and other advanced features. When it comes to driving financial success in a competitive area of technology, though, it often makes sense to meet the needs of enterprise clients.

That strategy potentially works even better when enterprises need to find reliable ways to maintain operations while limiting in-person contact with colleagues, employees, clients, and partners.

How Zoom Compares To Competitors

Google Meet and Microsoft Teams are two primary competitors to Zoom. It’s important to note that Zoom’s exclusive focus on videoconferencing products could give it an upper hand versus Alphabet or Microsoft, who have many irons in the fire so to speak when it comes to business opportunities.

The key advantages Zoom possesses over most competitors include:

• can handle more participants
• has more integrations
• has more generous meeting time limits

It’s uniquely designed to meet the needs of enterprise clients, so you will find that Zoom often does a better job of recreating the in-person experience.

ARK’s Zoom Valuation Forecast

ARK takes an aggressive position on the future of Zoom. The company’s growing value, however, depends on its market penetration.

ARK Invest’s forecasts show that Zoom’s total enterprise value in 2026 will be:

• About $200 billion with a 10% penetration
• About $275 billion with a 15% penetration
• About $375 billion with a 20% penetration
• About $450 billion with a 25% penetration

ARK’s projections include the belief that many companies will shift money from transportation to videoconferencing software. By doing so, organizations will lower their per-person spending.

Will ARK Invest Be Right About Zoom?

ARK Invest is basing many of its projections on reliable information from Gartner. There isn’t a reason to doubt the veracity of this data. Still, you must consider whether ARK’s analysts are being overly optimistic.

Given ARK’s history of success in forecasting a massive rise for Tesla – which proved correct – few brave analysts will condemn their lofty Zoom price targets.

Indeed a discounted cash flow forecast model suggests that the upside for Zoom is significant. Analysts peg the upside at north of 61% at the time of writing and even a pessimistic discounted cash flow forecast suggests upside to the tune of 30%.

Will Zoom Share Price Recover?

Before the pandemic forced people to shelter in place, Zoom’s stock price stayed between $75 and $100. As the benefits of its technology became more obvious to businesses and consumers, Zoom share prices grew steadily. It peaked at $559 per share on October 16, 2020. Since then, it has shown a downward trend that makes some people wonder whether Zoom share prices will recover. On the last day of 2021, a share of Zoom sold for about $184.

Zoom shares have fallen for several reasons. Now that a significant portion of the population has been vaccinated, more individuals and businesses feel safe meeting in person. With that said, record hospitalization rates were reported in early 2022, suggesting the need for Zoom may be more persistent than first thought.

Additionally, Microsoft has released several collaboration tools for Teams. These benefits make Zoom less attractive. Much like Microsoft Teams took on Slack, they tech titan has Zoom in its crosshairs now.

Regardless, ARK Invest is confident that Zoom share price will recover. Cathie Wood and her team have been right about many other more controversial predictions, but she’s had a rocky road in 2021 with her funds track records. She’s currently forecasting her portfolios will generate an annualized 40% return over the next 5 years, time will tell.

> How To Buy Zoom Stock

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.