Zoom Communications Inc. (ZM): A Bull Case Theory 

We came across a bullish thesis on Zoom Communications Inc. on Value investing subreddit by mrmrmrj. In this article, we will summarize the bulls’ thesis on ZM. Zoom Communications Inc.’s share was trading at $84.96 as of November 28th. ZM’s trailing and forward P/E were 16.53 and 14.03 respectively according to Yahoo Finance.

Zoom Communications Inc. provides an Artificial Intelligence-first work platform for human connection in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. In 2023, the company reported $100 million in profit while incurring $1.2 billion in stock-based compensation, resulting in an operating cash flow that was heavily skewed toward non-cash expenses.

Over the last twelve months, however, net income has risen to $1.6 billion, while stock-based compensation has declined to $800 million, improving the quality of earnings and showing that operating cash flow now represents a larger share of net income, moving from 90% to 66%.

At the same time, revenue growth has shown steady improvement, albeit from a modest base, reflecting the company’s gradual acceleration in top-line performance. Margins remain strong, with gross margins exceeding those of major peers such as Google, highlighting the company’s efficiency and pricing power. If revenue growth can reach 8%, the market potential suggests the stock could double, offering significant upside for investors.

This combination of stronger earnings quality, improving revenue growth, and superior margins marks a meaningful shift in the business fundamentals, differentiating it from previous periods where range trading was the primary approach.

For long-term investors, the improved earnings leverage and growth trajectory indicate that the company is entering a phase where operational improvements and disciplined expense management could translate into substantial shareholder value, making it an attractive opportunity at the current valuation. Overall, the business appears to be structurally stronger, with a clear path to both higher profitability and market re-rating, signaling a pivotal moment for the stock after years of sideways trading.

Previously we covered a bullish thesis on Zoom Communications Inc. (ZM) by mrmrmrj in January 2025, which highlighted the company’s strong balance sheet, minimal downside risk, and untapped growth potential. The stock has appreciated by approximately 6.18% since our coverage, partly reflecting cautious revenue growth The thesis still stands as fundamentals remain solid, while mrmrmrj now emphasizes improved earnings quality, lower stock compensation, and accelerating revenue growth.

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Disclosure: None.