Is it worth continuing to invest in Zoom?
Since the pandemic began, Zoom has become so ubiquitous that it is almost redundant to explain that it is a group video calling app – it is not the only one, but it has become the archetype. A quick internet search leaves a trail of recent news on how we Spaniards dress for meetings via Zoom, on Zoom Escaper (a tool to escape of those same meetings when they last forever) or on the “Zoom-free” Fridays that Citigroup bank has inaugurated.
It is a fact, Zoom is everywhere and the American company has made it profitable in the stock market. It is one of those investments that soared with the telecommuting boom caused by Covid 19. Its shares closed 2019 at $ 68 and are now at almost 313, an increase of more than 400%. But everything can change if vaccination goals are met in the coming months. Whether the value of the company continues to increase or not when we begin to glimpse the world after the pandemic will tell us a lot about whether this will be a place where the customs acquired in 2020 have come to stay or if everything has been a mirage and we will return to face-to-face work . “Zoom came to be worth more than all the airlines in the United States,” explains Enric Serradell-López, professor of Economics and Business Studies at the UOC. “In 2018 he was losing money and now he has multiplied his profit by 15. This can hardly be sustained over time ”.
For financial markets, the pandemic, more than a generator of abrupt changes, has been an accelerator of trends. That is why its impact has spawned a number of interesting trends. “For example, the explosion of cryptocurrencies. It was a marginal thing, with a dubious reputation, that it was not very clear who was behind it. And now they are investing in it millennials to level retail [compras de pequeños inversores] in a series of financial services platforms that allow it to do so ”, explains financial advisor Gonzalo Chávarri. Another case of growth related to the pandemic is that of the so-called ESG or socially responsible investment. “Basically, it is to invest with sustainable criteria, not only with the planet, but also in companies that respect transparency, gender equality, that allow their employees to reconcile… Banks have opened portfolios with this type of product: green bonds, funds investment with criteria, clean and renewable energy, water funds … It has been a bombshell. The public is increasingly aware, they want to know what they are investing in and know the traceability of their money so that they do not pay for workshops in Bangladesh or the destruction of the Arctic ”, he says.
Some say that the pandemic has been a black swan, something unexpected. For others it is a gray rhinoceros, an expected threat that we have not been able to stop. According to Enric Serradell-López, the economy reacted as if it were the first case. “The financial markets try to collect all the available information in real time and not only with current data but with future ones. They work like a thermometer of the economy. As for the discussion of whether this crisis has been a black swan or a gray rhinoceros, the truth is that in the annual report of the International Monetary Fund on the potential risks of the global economy, published shortly before its beginning, all kinds appeared. of dangers, but not even remotely something like that ”. By confining the world by surprise, there is no doubt that the great beneficiaries have been the companies that, before the pandemic, were committed to doing from home what we used to do in person. Whether it was to buy, (almost all the large chains have promoted trade online) or work, a reality that companies like Zoom have benefited from. “The market reacted quickly and abruptly, punishing certain sectors harmed by the stoppage of society and feeling a preference for others, such as the one embodied by Zoom”, explains Professor Serradell.
So the question is: According to the market, what will normality be like? Will we continue working from home? Because in large companies there is a division of opinions. Liberty, the American insurance giant, has bet on it, whatever happens. Microsoft announced the launch of Viva, a new technology platform designed for remote work. But at the same time the big Wall Street banks are not for the job. An internal note from JP Morgan stated: “The remote work lifestyle appears to have affected younger employees. Overall productivity and creative combustion have been affected. ” That bank assures that teleworking has lowered productivity, especially on Mondays and Fridays. Even more explicit was David Michael Solomon, CEO of Goldman Sachs, who without cutting a hair defined this type of work as “aberrant.” “We will correct this as soon as possible,” he added.
“Teleworking has come to stay. We can discuss the proportion, the sectors and whatever you want, but for every Goldman Sachs there are a hundred companies that are going to continue ”, says Enric Serradell-López. However, Gonzalo Bernardos, Professor of Economics at the University of Barcelona is skeptical. ”There is something that I call magical thinking, which in this case is that telecommuting is going to stay like 2020 and that is what has prompted many people to leave the cities and return to the towns where they were born. I agree with Goldman Sachs, JP Morgan and a large part of the large Spanish companies: this story that teleworking increases productivity is not true, and more so in a country of rogues like Spain. However, that is not going to mean a crash in Zoom’s profits. That technology has come to stay. Telework, not so much. Look at a detail: The employer is very insistent that it does not have to put all the means to the worker if he only teleworks one out of every five days. This indicates that, at most, large companies will allow you to work one day a week from home. Perhaps with the exception of technology companies like Spotify or those that work for results, like newspapers ”.
So, do we invest or not invest in Zoom? “My personal opinion is that it is too late to invest in Zoom, without a doubt,” says Gonzalo Chávarri. “It would scare me, because there are even signs of a bubble. To the minimum that there is bad news, the danger is that it hits a serious pull down ”. Bernardos agrees. “Man, it’s a little late. Zoom will continue, but there is a danger that another company will come along, offer the same, better and cheaper. This is the market ”.