Some investors are taking a wait-and-see position in regards to Zoom (ZM -1.44%) while others remain bullish on the company's ability to grow its product ecosystem. In this clip from "The Rank" on Motley Fool Live, recorded on May 2, Motley Fool contributors Jason Hall, Matt Frankel, and Danny Vena discuss their positions on Zoom and what they'd like to see the company improve in order to evolve.
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Matt Frankel: Zoom is down. Jason, correct me if I'm wrong, but something like 80% from the highs?
Jason Hall: Something like that, yes.
Frankel: So, why don't you tell us why you brought that one to the table today.
Hall: First of all, Zoom is an interesting business and I brought it to the table because I think Zoom is going to successfully continue to evolve from just this app that we use for like every way we interact with people whether it's personal get-togethers or board meetings or how you do a little bit of remote stuff with your physician. I think it's going to fully transition to a fully integrated communications platform. And that's something that we've seen that's already happened. If you look at the company's numbers, growth has slowed. There's no doubt about that. Revenue growth has certainly slowed. We've continued to see churn in its small- and medium-sized business segments. But what the company has done as a result of that is, it's made it easier and lower-cost for the company for those small, medium-sized businesses to come onto the platform than to come off of it, right? So you don't have higher start-up costs, a lot of people doing stuff, right, that costs Zoom money. So it makes that more efficient and it's really focusing heavily on the enterprise. And even as we've seen continued churn in that small- and medium-sized business, enterprise customers, particularly the ones it has established itself with, are spending more and more money with Zoom to do more and more things. And I think we're going to continue to see that be the trend for the company going forward. And from a valuation perspective, I think it's very, very interesting. The reason that I ranked it, I think, I ranked this one No. 4 out of these six, frankly, I just have a lot of higher conviction in some of the others, because I think there was a clear line of sight for them to continue to grow. I think, of all of these, Zoom is probably the one that's going to face the stiffest competition from some very serious companies, like Microsoft (MSFT 0.21%)for example, which is a substantial competitor, increasingly, because Zoom is trying to do more things and is starting to step into other companies' business. That's why I did rank it a little bit lower. I think it's going to continue to be a very profitable business. It's just, can it continue to take share and consolidate and grow?
Frankel: Danny, any thoughts on Zoom?
Danny Vena: Like many people, Zoom was a company that hit my radar very early on in the pandemic. I bought the stock then before it had that huge run up, and now, several positions in Zoom later, my holdings are essentially flat. So you know, couple years of ownership into the stock and you know after running up several hundred percent and then falling, the stock's about breakeven. You know, I think folks are missing the opportunity that Zoom has in front of it and the fact that the company's financials have improved drastically over the past couple of years. So I think it's a little bit naive, I think, to believe that the company is worth less now than it was, or the same now than it was two years ago. So I think there's an opportunity there. Now the reason that I ranked it lower, for many of the reasons that Jason said, is I think the company is going to face some competition, and also I think it's kind of reinventing itself. There are a lot of folks in the streaming video or video conferencing space. And so Zoom is expanding beyond its roots. So I think this is a company that investors are kind of taking a wait-and-see attitude, just looking to see, OK, how is the company going to reinvent itself? And is it going to be successful? But that said, I am holding my shares. They're not going anywhere.