The world’s fastest-growing video conferencing service company, Zoom, has seen its market valuation rocket past $130 billion—more than 3 times the value of the Nigerian Stock Exchange.
Zoom has attracted high demand growth for its service, especially since COVID-19 changed the way the world works. As one of the pioneers of modern work-from-home tools, millions of organizations around the world have adopted the application as their preferred communication tool in the workplace, particularly video conferencing.
What we know: At the time of drafting this report, Zoom sported a market valuation of $131 billion, compared to the Nigerian Stock market with a value presently standing at $42.1 billion (N16 trillion), using the official exchange rate of N380 to $1.
- Zoom’s enviable performance began in early 2020, when it printed a market capitalization of just $19 billion. While Zoom posted $1.35 billion in revenue over the past 12 months, the Nigerian Stocks bourse, in comparison, printed a market capitalization of $39.1 Billion (N14.87 trillion) at the end of January, according to data obtained from Nairalytics (financial data arm of Nairametrics).
- The bullish run got intensified for the tech company, particularly in Q2 that ended August 31, when it posted an impressive earning result of $663.5 million in revenue (far beating analysts’ prediction of $500.5 million)—and it still firing on all cylinders.
- Such gains seen in Zoom’s stock price have added so much wealth to its investors, that Zoom founder, Eric Yuan, has seen his own fortune rise more than 551% year to date, with a valuation put at about $23.2 billion, according to data seen from Bloomberg Billionaire Index.
Eric Yuan is presently the chairman and CEO of Zoom Video Communications, the world’s biggest provider of video conferencing software to the business.
On the other hand, Nigerian stocks also defied expectations and produced positive returns, with every month in the third quarter, printing positive returns as buying pressure increased across the market spectrum. The Nigerian stock market’s performance was triggered by the Industrial Index emerging as the biggest gainer, up by 8.14% followed by the most liquid index, banking index (10.08%), and the Consumer Index printing (2.74%), still market capitalization hovered below $40 billion.
Zoom has now boosted its revenue forecasts to $690 million for the present quarter (through the end of October), and also increased its financial guidance for the full fiscal year, through Jan 2021, to about $2.4 billion in revenue, up from $623 million for the year through January 2020, as it takes into account the demand for remote work solutions for businesses reaching a record high.
The exponential valuation seen in the world’s biggest video company had been enhanced by the fact that a significant amount of businesses and individuals now work remotely, on the bias of the world’s most disruptive biological pathogen COVID-19’s continued spread, triggering global investors to increase their buying pressure on the American communications technology company, which is barely less 10 years old in operation.
Bottom-line: Covid-19 may have caused a lot of damage to the global economy since it was declared a pandemic in the first quarter of the year, but not for remote working app companies like Zoom, Slack, and Microsoft Teams.
- The US stock markets assign significant value to companies that can grow exponentially, as they believe these are companies that will continue to dominate the future of work.
- Just like US tech stocks, stocks on the Nigerian Stock Exchange have also gained significantly in the latter part of this year.
- However, rather than gaining from higher revenues growth, they have relied on Meffynomics (lower interest rate in a high inflation economy) to attract portfolio inflows from local investors.