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JPMorgan's CEO Just Made a Comment Zoom Investors Need to See

By Trevor Jennewine - May 14, 2021 at 5:30AM

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Is Zoom stock headed for trouble as the economy reopens?

Jamie Dimon is the most admired of the Fortune 500 CEOs, according to a survey of top executives in 2020. Among other accomplishments, Dimon helped navigate JPMorgan through the financial crisis in 2008, and during his 16-year tenure, the stock is up over 300%, outperforming the broader market.

Given Dimon's reputation, his recent comments may have investors wondering if it's time to sell Zoom Video Communications (ZM 3.39%). During an interview with The Wall Street Journal, Dimon said: "I'm about to cancel all my Zoom meetings... I'm done with that." He also expressed skepticism about the long-term viability of remote work, saying he expects the workplace to look "just like it did before" by September or October.

Not surprisingly, Zoom stock fell on the news, extending a longer decline that started last October. Shares are now down nearly 50% from their 52-week high. While this looks alarming on the surface, I don't think investors should panic. Here's why.

The future of work

Remote work isn't an option in every industry, and it still presents challenges even when it is feasible. For instance, teamwork becomes much trickier when employees are in different physical locations.

Woman at desk speaking with nine other people on Zoom

Image source: Zoom.

But remote work also creates opportunities. It gives people the freedom to live wherever they want, structuring their jobs around their lives, which could lead to happier, more productive employees. It also allows enterprises to hire the best and brightest individuals, regardless of where they live.

That's why a growing list of companies -- Facebook, Twitter, Shopify, and Zillow -- have already transitioned to remote work on a permanent basis. More importantly, research firm Gartner believes 48% of all employees will work remotely at least part-time post-pandemic. That's a big increase from just 30% before the coronavirus.

Looking ahead, that shift will create a need for digital collaboration solutions, and Zoom looks like a perfect fit.

In Okta's 2021 Business at Work Report, Zoom was recognized as the most popular video conferencing app in the workplace for the second consecutive year. More significantly, 42% of Okta customers using Microsoft 365 also use Zoom. Put another way, despite free access to Microsoft Teams, many clients are still paying for Zoom. That's a significant endorsement of its value.

The future of corporate travel

In a recent earnings call, Salesforce CEO Mark Benioff noted that digital alternatives to physical meetings save considerable time and energy, allowing employees to "go anywhere just much, much faster." Benioff also said that, if he could rewind time, he would enforce a much more digital approach than he did in the past.

Those words carry weight coming from Salesforce, the leader in customer relationship management (CRM). They also point to a potential drop in corporate travel, as video conferencing is a much more efficient solution. Here again, Zoom has an opportunity to grow.

Elegant conference room created with Zoom Rooms.

Image source: Zoom.

For instance, Zoom Rooms pairs Zoom software with certified hardware, allowing clients to convert corporate offices into video conferencing suites. This product makes it easy to book and start meetings, as well as share content and collaborate with interactive whiteboards.

According to the U.S. Travel Association, businesses racked up $334 billion in travel expenses in 2019. As the pandemic resolves, enterprises will have to weigh those costs against the benefits. Sure, it's nice to meet face-to-face, especially when trying to land a sales deal or collaborate on a joint project. But airfare is expensive and traveling is often inconvenient. Zoom Rooms provides a professional experience that eliminates those inefficiencies.

The workplace ecosystem

Zoom has another advantage that should keep it relevant in the coming years: The Zoom App Marketplace.

Using the Zoom Developer Platform, partners can integrate Zoom features (video, phone, chat, content sharing) with other cloud services and private applications. These software solutions are available through the Zoom App Marketplace.

For example, Zoom integrates with collaboration solutions like Slack and Microsoft Teams, enabling users to start Zoom meetings or make calls with Zoom Phone from within those platforms. Notably, between January 2020 and February 2021, the number of integrations available on the App Marketplace skyrocketed from 200 to over 1,000, signifying the company's increasingly critical role in the workplace ecosystem.

A final word

In fiscal 2021 (ended January 2021), Zoom's client base jumped from 81,900 to 467,100 -- a 470% increase in a single year. That drove sales of $2.7 billion, up 326% compared to fiscal 2020. Given those incredible statistics, Zoom's growth will inevitably slow in the coming years. But that shouldn't worry investors, nor should the comments made by Jamie Dimon.

Zoom has captured significant market share, a trend that was accelerated by the pandemic. The company also has a thriving network of third-party developers, which has made Zoom a critical part of many workplace applications. More importantly, Zoom has plenty of opportunity left in supporting remote work and learning.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Trevor Jennewine owns shares of Okta and Shopify. The Motley Fool owns shares of and recommends Facebook, Microsoft, Okta, Salesforce.com, Shopify, Slack Technologies, Twitter, Zillow Group (A shares), Zillow Group (C shares), and Zoom Video Communications. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$113.23 (3.39%) $3.71
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
META
$180.89 (0.22%) $0.39
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$293.47 (0.53%) $1.56
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$122.46 (0.27%) $0.33
Salesforce, Inc. Stock Quote
Salesforce, Inc.
CRM
$191.06 (0.62%) $1.17
Zillow Group, Inc. Stock Quote
Zillow Group, Inc.
ZG
$39.05 (-1.56%) $0.62
Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$44.50 (0.54%) $0.24
Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$39.84 (-2.26%) $0.92
Zillow Group, Inc. Stock Quote
Zillow Group, Inc.
Z
$39.06 (-1.44%) $0.57
Okta Stock Quote
Okta
OKTA
$107.11 (2.84%) $2.96
Slack Technologies, Inc. Stock Quote
Slack Technologies, Inc.
WORK

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