2020 forced all kinds of changes on the world. We Zoomed into work, Yoga classes, and even weddings and funerals. Doctor’s visits and K-12 education were conducted via videoconference.
However, what happens in a post-pandemic world? Will the explosive revenue growth and share price rocket ships that Zoom Video and Teladoc have enjoyed continue, slow down or retract?
Below are 5 Key Considerations for How Virtual Conferences Will Thrive (or Wilt) in a Post-Pandemic World
Work-From-Home or Return to the Office?
Gyms or At-Home Workouts?
Medical Visits or Tele-Visits?
Back to School
Is Good News Already Overpriced In?
Here is more color on each.
Work-From-Home or Return to the Office?
83% of “knowledge” workers prefer permanent work-from-home or a hybrid schedule. Only 17% want to return full-time to the office (source: FutureForum). SalesForce has committed to completely redesigning their offices to accommodate collaborative in-office environments, rather than cubicles. On February 9, 2021, Brent Hyder, the President and Chief People Officer of Salesforce, announced, “For employees who don’t live near an office or have roles that don’t require an office, they will work remotely full-time.” Most Salesforce employees will be on a flex schedule, coming into the office only 1-3 days a week for “team collaboration, customer meetings, and presentations.” The smallest population will be in the office 4-5 days a week – if their jobs require it.
Facebook, Square, Twitter and other corporations have all announced similar or more aggressive plans. Of course, there are still many professions that require in-person attendance.
Gyms or At-Home Workouts?
37% of Zoom’s revenue in the 4th quarter of 2020 were customers with fewer than 10 employees.
During the pandemic, resourceful personal trainers and yoga instructors offered online classes, as did mental health professionals and educators. Will everyone just return to the gym, once it’s safe to? Or will Zoom continue to have small business owners paying for business subscriptions?
Zoom’s CFO Kelly Steckleberg is optimistic that the Zoom Phone, On Zoom events and Zoom apps that are in development will offer incentives for entrepreneurs to stick with their subscriptions. On January 21, 2021, Zoom Video announced that 1 million Zoom Phone seats had been sold.
Medical Visits or Tele-Visits?
While Teladoc is the clear winner in the specialized segment of telemedicine, Zoom is a platform that many doctors are also using. Videoconferencing offers convenience and safety. Why sit in a waiting room with sick people, if you don’t have to? Why deliver lab results by phone, when you can schedule a follow-up videoconference? Will tele-meetings offer cost reductions and increased profits to small doctor’s offices? Many entrepreneurs, including doctors with smaller practices, have discovered that videoconferencing offers them ways to stay better connected with their patients and customers, at a lower cost.
Research supports classroom learning for kids K-12. Cities across the U.S., and around the world, are bringing their students back to school. How will this impact Zoom Video’s revenue? Not at all because Zoom Video offers their K-12 support for free to the 125,000 domains that the company currently serves. Further, parents are quite thrilled with the option of conducting parent-teacher and PTA meetings online. Students might not like having to attend school online on Snow Days. However, this is likely to become the new norm…
Zoom hasn’t announced how they intend to monetize this large customer base. However, it is likely that their financial team is developing a plan.
I’ve focused on Zoom and Teladoc in this blog because these are the companies with the strongest revenue growth – by far. No competitor comes close.
Teladoc’s first quarter revenue growth is predicted to slow down to just 19%, compared to growth of 145.5% in the 4th quarter of 2020. However, 2021 full-year sales could be double, at $1.95 to $2.00 billion, compared to $1.094 billion in 2020.
Zoom expects their 1st quarter f 2021 to be another rocket ship excursion, with sales of $905 million, compared to $328.2 million last year. Full-year revenue is projected to increase by 42.6% to $3.8 billion.
Is Good News Already Overpriced In?
A complete return to life as it was in 2019 would upend our Everything-Online Experience of today and change the revenue projections of videoconferencing companies. However, that seems highly unlikely, as both workers and employers are favoring a Work-From-Home and hybrid employment experience.
If some lesser-informed investors fear videoconferencing will become less relevant in a post-pandemic world, and continue selling off shares of Teladoc and Zoom Video, that could present a buying opportunity. Teladoc shares are currently in the $183 range, after hitting highs of $308/share in February of this year. Zoom shares have dropped 45% from their high of $589/share.
However, even at these lower prices, and with stellar growth, Zoom and Teladoc are trading at lofty multiples. Zoom’s price-earnings ratio is 150. Teladoc is still cash-negative (thus no PE). However, Teladoc’s price-sales ratio is 15, compared to 7 for American Well and 4 for Cerner. Zoom’s price-sales ratio is 37.
In today’s world of irrationally exuberant company valuations, many people are buying into great companies at high prices, hoping to sell higher. This is a risky proposition. While owning a great company does pay off over time, the price you pay does matter. The Wall Street rollercoaster has been reliably volatile, creating opportunities for the patient buyer to buy low, and for the opportunistic seller to sell high. Being on the right side of the trade can be as easy-as-a-pie-chart once you are properly diversified and educated with Modern Portfolio Theory and seasonal rebalancing.
I’ve featured two companies which should fare quite well in a post-pandemic world. However, the price you pay matters.
Join us for our April 24-26, 2021 Financial Empowerment Retreat. (Click to learn more.) In 3 days, you'll learn how to pick great companies (like Zoom Video and Teladoc), incorporate them into a well-diversified wealth plan, receive a complete Money Makeover and transform your life forever! Bring your friends, family and teens for an unbelievably low group rate. Call 310-430-2397 or email info@NataliePace.com to learn more now.
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Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.
ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.
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About Natalie Pace
Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 4th edition of The ABCs of Money was released on October 17, 2020.
Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.
Natalie Pace is the co-creator of the Earth Gratitude Project and the author of The Power of 8 Billion: It's Up to Us, The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She is a repeat guest & speaker on national news shows and stages. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.