Please ensure Javascript is enabled for purposes of website accessibility

Tech Sell-Off: My Best Stock to Buy and Hold Right Now

By Trevor Jennewine – Dec 5, 2021 at 6:20AM

Key Points

  • Zoom unifies voice, video, and messaging in a single application.
  • According to a technology research company, many enterprises will adopt a hybrid work model.
  • Zoom founder and CEO Eric Yuan has built a strong corporate culture.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many investors still view Zoom as a COVID stock. Here's why they're wrong.

Last year, Wall Street couldn't get enough of Zoom Video Communications (ZM -0.22%). The stock climbed 396% in 2020, fueled by the company's supercharged financial performance during the height of the pandemic. However, things have reversed course this year, and the stock now sits 66% below its all-time high.

Of course, many tech stocks have sold off sharply in recent months, but the driving force behind Zoom's nosedive is perception. Many investors still view Zoom as a "COVID stock," failing to see the company's relevance beyond the pandemic. Fortunately, that has created a buying opportunity for long-term investors.

A businessperson videoconferencing with several people, using a laptop and desktop monitor.

Image source: Zoom Video Communications.

More than videoconferencing

Zoom is a video-first communications company. Its cornerstone product is Zoom Meetings, an app that makes it possible for people to work and engage remotely. But Zoom's platform goes much deeper, providing a comprehensive solution for voice calling, videoconferencing, messaging, and content sharing. To that end, the company aims to displace legacy communications infrastructure.

For instance, Zoom Phone is a cloud phone system that eliminates the need for costly on-site hardware. And Zoom Rooms is a conferencing solution for hybrid workforces, blending software and hardware to turn corporate offices into professional collaboration suites. That's particularly relevant, because just 25% of enterprise meetings will take place in person by 2024, down from 60% today, according to technology research company Gartner.

Additionally, the Zoom Developer Platform is a suite of tools that allow third-party developers to build integrations and applications with Zoom. Those solutions are then made available through the Zoom App Marketplace, adding Zoom functionality to popular software like Microsoft Teams, HubSpot, and Salesforce. In short, Zoom's comprehensive communications platform is designed to meet the needs of modern enterprises, whether their employees are in the office or working remotely.

On that note, Gartner recently recognized Zoom as a leader in both the meetings solutions market and the broader unified communications as a service (UCaaS) industry, highlighting its successful expansion beyond videoconferencing. That validates management's growth strategy, and it should ease any fears about Zoom becoming less relevant in a post-pandemic world.

Solid financial performance

Though growth is slowing, Zoom has still delivered strong financial results in fiscal 2022. Of particular note, Zoom Phone saw triple-digit sales growth in the most recent quarter, and the company's total customer count rose 18% to 512,100.

Moreover, 2,507 of those customers spent at least $100,000 during the past 12 months, up 94% from the prior year. That's encouraging -- those big spenders are less likely to churn, simply because they've come to rely so heavily on Zoom.


Q3 2021 (TTM)

Q3 2022 (TTM)



$2.0 billion

$3.9 billion


Free cash flow

$1.0 billion

$1.7 billion


Data source: YCharts. TTM = trailing-12-months. Note: Fiscal Q3 2022 ended Oct. 31, 2021.

Looking ahead, shareholders should expect tough competition with Microsoft, a tech titan with much deeper pockets. However, Zoom's popularity soared during the pandemic, so much so that its brand name has become a verb. And that popularity should keep the company on the radar of potential clients.

A strong corporate culture

As a final point of consideration, investors shouldn't overlook the impact of Zoom's founder-led management team. CEO Eric Yuan once said: "My number one priority is to make sure our employees are happy, and then they can deliver happiness to our customers." And he has clearly made good on that mission.

According to Glassdoor, 88% of employees would recommend Zoom to a friend, and 95% approve of Yuan's leadership. That has indeed translated into customer satisfaction. Zoom has kept its expansion rate over 130% for 14 consecutive quarters, meaning the average customer spends at least 30% more each year.

Here's the bottom line: Gartner estimates that 32% of all employees will work remotely at least some of the time by the end of 2021, up from 17% in 2019. That trend toward hybrid work represents a significant opportunity for Zoom. In fact, management puts its addressable market at $91 billion by 2025. Yet the stock trades at just 14 times sales -- its cheapest valuation since the company went public in April 2019.

Is Zoom really worth less today than it was before the pandemic? I don't think so. That's why now looks like a good time to buy a few shares.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends HubSpot, Microsoft,, and Zoom Video Communications. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.