Top 5 From Cathie Wood’s Q2 Portfolio

2. Zoom Video Communications, Inc. (NASDAQ:ZM)

ARK Investment’s Stake Value: $1,028,943,000

Percentage of ARK Investment’s 13F Portfolio: 6.08%

Number of Hedge Fund Holders: 44

Zoom Video Communications, Inc. (NASDAQ:ZM) is an application software company providing a unified communications platform. The company offers its products and services in the Americas, the Asia Pacific, Europe, the Middle East, and Africa.

A ‘Buy’ rating was noted on Zoom Video Communications, Inc. (NASDAQ:ZM) on August 28 by analyst Catharine Trebnick at MKM Partners. The analyst also placed a $125 price target on the stock.

Zoom Video Communications, Inc. (NASDAQ:ZM) had EPS of $1.05 in the second quarter of 2023, beating estimates by $0.11. The company’s revenue was $1.1 billion, up 7.6% year-over-year. Over the next three-to-five years, Zoom Video Communications, Inc.’s (NASDAQ:ZM) EPS is expected to rise by 14%.

Our hedge fund data shows 44 hedge funds long Zoom Video Communications, Inc. (NASDAQ:ZM) in the second quarter. Their total stake value was $2.9 billion.

Horos Asset Management, an investment management firm, mentioned Zoom Video Communications, Inc. (NASDAQ:ZM) in its first quarter 2022 investor letter. Here’s what the firm said:

“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago (see here) is Zoom Video Communications (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed nearly 80%.

Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”