Zoom Earnings

Curious what you guys think about Zoom.

As you might have heard, ZM earnings reported last night with quadrupling of revenue and beating earnings (0.92 actual vs. 0.40-ish estimates) by a huge amount.

As a result, its share price went up 37% / well over $100 on a $315 stock over-night (which is unheard of outside of penny stocks). Robinhood gamblers with OTM weekly calls instantly earned 10x+ their gambling stakes, even with the immense IV factored into extrinsic value. 

The numbers are great: you have a 100bn+ TEV business with 200%+ YoY revenue growth at 70% + gross margins, 18% EBITDA margin, nearly 30% net income margin, and 50%+ FCF conversion on revenue (vs. the standard of 20-25% for FB/AAPL/MSFT/GOOGL).

Currently, ZM is trading at 90x TEV/revenue, 500x TEV/EBITDA, 400x P/E. 

Thoughts: do you believe the equity is fairly valued today? 

Yes, this is a company with once-in-a-lifetime growth potential and incredible margins/profitability, all under the strongest industry tailwinds possible, but what valuation does that merit? 

My view is that 20-30x TEV/Revenue, 50x EBITDA, 60x P/E would be fair. The current multiples are either not meaningful and just mathematically inflated due to a lower denominator from being a newer break-even company, or they are inflated to price in even greater growth. That said, I do feel the FOMO as with the Tesla/FB rally this past quarter where some of my friends have taken $200 gambling plays into weekly calls into $6k overnight. Unfortunately cannot trade anything because of bank regulations.