Video-conferencing specialist Zoom Video Communications (ZM 1.73%) is doing a lot of things right. The company's eponymous video-chat platform became the go-to solution for remote meetings, family reunions, and other social gatherings during the COVID-19 lockdowns a year ago, sending Zoom's revenues to the moon.

The stock has doubled in 52 weeks. Early investors have seen Zoom's shares gain 420% in two years.

I'm not itching to jump on Zoom's bandwagon, though. The company has to answer one very important question first. Only then would I take Zoom's "buy" button seriously.

A young female office worker at her laptop, glancing at the camera with a frown.

Image source: Getty Images.

The game-changing question

It's quite simple, really. I get that Zoom had a great year in 2020, but the company is not universally loved and there are lots of competing video-conferencing solutions on the market. How can Zoom keep the good times rolling?

It looks like the company has already harvested most of the low-hanging fruit. I'm not convinced that Zoom has what it takes to become a titan of business software and services. Therefore, the stock looks incredibly expensive in the light of a limited business opportunity.

The story so far

The pandemic inspired a surge in free Zoom meetings, followed by a wave of rising interest in its premium solutions for larger companies and organizations. The period of skyrocketing customer growth is already a fairly distant memory, replaced by a slower-paced growth trend.

The number of clients with more than 10 employees was growing at a consistent clip of roughly 12% per quarter until the pandemic rolled in. The customer list more than tripled in the first quarter of fiscal year 2021, followed by a modest 39% increase in the next report. Zoom's sequential customer-growth rate stopped at just 8% in last month's fourth-quarter report.

What's next?

Zoom carries a $90 billion market cap on the skinny shoulders of just $2.65 billion in trailing revenues. Nosebleed valuations like that are normally reserved for companies that can double their sales each year for the foreseeable future.

Zoom Video needs to show me how it plans to deliver extreme top-line growth from this lofty plateau. Otherwise, I would expect the stock to slide until the market value matches a more realistic set of growth expectations.

That could be a long and painful ride. I prefer to watch it from the sidelines.