Zoom (NASDAQ:ZM) has been one of the best-performing stocks of the COVID-19 pandemic. After one look at the company's latest numbers, it's easy to understand why. But is Zoom a great long-term investment at the current share price?
In this Fool Live video clip from our Nov. 9 "Industry Focus" show, host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss the post-pandemic future of the videoconferencing leader.
Jason Moser: Duey asks, "Does the Fool still believe in Zoom long-term? I have made some gains and I'm wondering if I should get out and take profit now." Matt, I'm going to let you kick this discussion off as we are talking on Zoom. But what do you think about Zoom these days? Obviously, one of the stay-at-home stocks that's getting hit pretty hard.
Matt Frankel: I like Zoom. I love their product. Love their product. I'll start by saying that. I have a relatively unpopular opinion around the Fool when it comes to these reopening stocks in general, that they're not going to retain the amount of business that people think they're going to post-pandemic. I don't think everybody is going to be meeting on Zoom after the pandemic. I think to justify their current valuations, Zoom will either need to create some add-on products, maybe acquire something they could cross-sell to all of the people that have adopted their product. Create something that adds value to in-person meetings. That would be huge to change my thinking on the company. I don't own the stock. I know many people at the Fool still believe in Zoom long term and I believe in it as a long-term business, I just can't really justify the current valuation. Today, they're down 15% before the show. That might change. But in the $500 level it was at, I couldn't make the valuation case. Do you own the stock, Jason?
Jason Moser: I don't and it's funny. I do agree with you on the evaluation thing. Listen, I recommended Zoom for our Augmented Reality and Beyond Service better than a year-and-a-half ago.
Matt Frankel: I remember that.
Jason Moser: When that happened, Zoom was trading around $90 a share. Even at that point, I said, listen, this is a business I like a lot, the valuation is a sticky point for me, but my philosophy typically is, if I find a business where all of the other boxes are checked and valuation is the only thing that really concerns me, then I can see the rationale for maybe buying a position and opening a position there. In buying in third or fourths, buying in drips and drabs. You don't have to buy it all at once. That was my recommendation for folks. I said, listen, I understand you get valuation concerns, I do too, maybe this is a position that you build over time, and you start now and if it goes up, it goes up. If it goes down, it goes down. But either way, you can be a little bit more deliberate and of course, it never looked back. It just continue to go up. The pandemic hit and the rest is history. I think you're right. I think as soon as this stuff passes by, it feels like there's already Zoom fatigue. I think people are getting sick of just having to communicate this way. While I think it'll continue to be a valuable tool for businesses everywhere. We've seen a lot of success pull-forward, there's no doubt about it. I am a big believer in the company and what they're doing. Buying and selling is a very personal decision. Selling is a very difficult one to do. Locking and gains are all sorts of considerations that you have to make. There are tax implications and what not. If it's something where you feel like you have a position and you own more than you feel comfortable with, maybe it's OK to take some off the table. I don't think it's a position where I would sell the whole thing. I think this is a business that you want to own. The longer that you own it, the more it makes sense in most cases, and I think Zoom will be no exception there, but it's easy to understand if it's become a position that's causing you to lose some sleep at night because the stock has just been on a phenomenal run. But yeah, man, I'm looking forward to when we can actually tape these shows in the studio and you can actually get up there and we can talk face-to-face for a change.
Matt Frankel: But we never knew how much we would miss stuff like that until this happened.
Jason Moser: I know.
Matt Frankel: Everyone always complained about going into the office and working and stuff like that. Not just at the Fool, but just in general, people complained about going to work in offices. But now everyone misses traveling around and doing all that. I know I do.
Jason Moser: Well, our investing team, I'm not saying that everybody agrees with this, but I think a lot of people agree at least, that the collaboration that comes from being in person, face to face, talking with each other, there's a collaboration that comes from a physical presence that you can't get otherwise. I think Reed Hastings is right. If you haven't read that Reed Hastings interview regarding COVID and his views on remote work, I encourage you to check it out because I think he said a lot of good things there. It's nice that we have this capability when we need it. But like valuation, you want to have many tools in your toolbox. We want to get our work done. You want to have many tools in your toolbox in order to get your work done. Yeah.