Looking back at the last two years, there may be no stock more representative of the pandemic's impact on the stock market than Zoom Video Communications (ZM -0.47%). After growing parabolically in 2020, the stock has come crashing back to earth and is down 45% year to date at the time of this writing. This is especially stark when compared to the S&P 500, which is up 27% on the year.

That's a painful fall from grace for shareholders. On the other hand, the business is still strong and the market may be mispricing the stock, making its current price pretty attractive. As we heard into 2022, Zoom is at an interesting point in its life as a public company, and investors would be wise to take a closer look.

Two people on a virtual video meeting.

Image source: Getty Images

Two-year comparisons are impressive

For better or worse, Zoom has become synonymous with the pandemic. Its rise to prominence and the resulting performance were tied to a massive need for video communications at the height of lockdowns. This demand pulled forward a ton of growth and warped some investors' views of the company's fundamentals.

Because of this, it is helpful to take a look at Zoom's performance as compared to 2019. After all, year-over-year comparisons in 2021 are facing some awfully tough comparisons to 2020, when demand was at its peak. The chart below compares Zoom's Q3 of 2022 (ending Oct. 31, 2021) to the corresponding quarter two years ago.


Q3 2020  

Q3 2022



$166 million

$1.1 billion


Net income

$2 million

$340 million


Free cash flow

$54 million 

$375 million 


Data source: Zoom SEC filings.

Turning to user growth, Zoom's own metrics for evaluating its growth also had impressive two-year results:


Q3 2020 

Q3 2022 


Customers with more than 10 employees




Customers contributing more than $100,000 in revenue




Data source: Zoom SEC filings.

By taking out of the equation the volatility of the past two years and viewing Zoom's performance on this two-year basis, we see just how remarkable the growth of its business is. More importantly, the growth in larger customers -- those with more than 10 employees and those spending more than $100,000 in revenue -- provides a large base to upsell new features and hardware options as Zoom's offerings expand.

More than just video chat

All successful companies find ways to keep expanding their business in order to create new revenue streams and remain relevant in an ever-changing world. In order to do this, businesses need the cash to invest in research and development and capital improvements. Zoom has the balance sheet to do this and has been very active in rolling out new products.

Zoom ended the last quarter with $5.4 billion in cash, cash equivalents, and marketable securities and only $97 million in debt. This gives Zoom plenty of capital to expand its business. To that end, Zoom has recently introduced Zoom Phone, Zoom Meetings, Zoom Video Webinars, and Zoom for Home.

Each of these initiatives are designed to expand the business beyond the simple videoconferencing app the company became known for. Zoom Phone was called out on the most recent earnings call as having triple-digit year-over-year revenue growth, showing these new initiatives are starting to pay off.

Zoom's management also views international expansion as an important opportunity. Currently, 33% of revenue comes from international sales. Continuing the two-year comparisons, that number is up from Q3 2020, when international revenue was only 20% of total revenue. If Zoom can continue to grow internationally, it opens up plenty of new revenue opportunities.

Buy, sell, or hold?

ZM PE Ratio Chart

ZM PE Ratio data by YCharts

For a company like Zoom that has been so tied in investors' minds to the pandemic, it can be difficult to take a step back and see the forest for the trees. Taken without the noise of the past two years, Zoom is clearly a buy for existing shareholders or those investors looking to start a position.

To make the decision even easier, Zoom is trading at or near its low for price-to-earnings (P/E) and price-to-sales (P/S) ratios. Whereas during the pandemic the case could be made that the company's valuation got ahead of itself, it's clear now that the valuation is more in line with, if not underestimating, Zoom's fundamentals. While the growth has slowed when compared to the pandemic highs, it's clear that Zoom is still executing and growing -- and worth considering heading into 2022.