Zoom was once a popular stock during the pandemic, but its market success has worsened over the last few years. An investor, Eric Semler, says that the company’s stock price has dropped by about 40% in the previous three years, about 73% less than S&P 500. This lack of success lasts five years, up to 84%. Even though Zoom has forward earnings multiple of 15x and a forward EBITDA multiple of 9x, its valuation is still not very high because sales growth is still slow.Zoom’s Strong Cash but Uncertain Deployment
Zoom has $7.7 billion in cash, almost a third of its $25 billion market value. This is one of its most significant financial factors. The company is also still making good money—last quarter, it made $458 million in cash and had EBITDA margins of about 40%. On the other hand, Semler said that Zoom doesn’t have a clear plan for spending its substantial cash reserves, which makes its growth prospects even worse, it’s expected to stay in the low single digits.
Why we need a Bitcoin Treasury plan
Semler thinks Zoom should use its $2 billion in annualized free cash flow and easy access to low-cost debt to buy Bitcoin as part of a Bitcoin treasury plan. He talked about how his company had done well with a similar strategy by buying 3,192 BTC worth $305 million, which helped the stock price double last year. Semler said that Zoom could regain investor interest, raise the value of its stock, and rebrand itself as a forward-thinking tech company by becoming one of the most significant business Bitcoin holders.
Will Zoom’s leaders accept Bitcoin?
Semler strongly supports a Bitcoin plan, but Zoom’s founder and CEO, Eric Yuan, has the final say. He has super-voting shares and the power to make such a change happen. But Yuan hasn’t said anything about Bitcoin or whether Zoom would think about this method yet. Zoom’s financial future could change if it adopts this approach.
Conclusion
Eric Semler’s bold suggestion that Zoom use Bitcoin as a form of cash is that Bitcoin could help the company’s slow growth. Zoom has the chance to change its financial picture since it has billions of dollars in cash on hand and no clear plan for using it.
