Zoom got attention this week after Ark Invest CEO Cathie Wood called it “one of the most important communication companies to come along in many decades” and said her firm bought more shares for its Ark Innovation ETF (ARKK) as the video conferencing stock dropped after earnings.
Sanchez didn’t follow suit.
“I agree with Cathie that the landscape is changing dramatically. However, I’m not sure Zoom is necessarily the best way to play that at today’s valuation,” she said.
Zoom was trading at 50 times forward price to earnings on Friday.
Microsoft, whose Teams product competes directly with Zoom’s product, can offer investors a better bang for their buck, said Sanchez, also chief market strategist at Lido Advisors.
“They just have a much larger user base, the entry price point is cheaper, and their entire ecosystem is central,” she said. “They’ve already gone into the unified space. So I don’t see why you would choose Zoom over Microsoft.”
One reason might be optimism about Zoom’s longer-term prospects, New Street Advisors Group founder and CEO Delano Saporu said in the same interview.
“You have to be a long-term player here if you’re holding shares,” he said. “If Zoom is going to get more into the enterprise services and high-ticket accounts and clients, they’re going to have the long-term strategy to build a robust book of services … that complements what these enterprises do. That’s going to be the sticking point.”
With Zoom’s growth still strong and the stock approaching a range of support near $200 a share, “there might be an opportunity” for those who believe flexible work is here to stay, Saporu said.
Disclosure: Gina Sanchez and Lido Advisors own shares of Microsoft. New Street Advisors Group owns shares of Zoom.