=== SUMMARY ===
- Author argues ~45% of Zoom's market cap is cash, marketable securities, and investments, especially its Anthropic stake.
- Thesis: Zoom's core business is effectively priced at ~$17.4b, while it generates >$1.1b in SBC-adjusted free cash flow, making the underlying business look cheap.
- Quality: Solid balance-sheet breakdown and logical valuation exercise, though Anthropic IPO valuation is speculative and SBC treatment is debatable.
=== SENTIMENT ===
BULLISH
=== TRADE IDEAS ===
ZM - LONG | confidence: 0.60 | sentiment: +0.50
Speaker: u/k_ristovski
Thesis:
1. THE FACT: $31.5b market cap minus $0.9b cash, $6.8b marketable securities, and $6.4b investments leaves ~$17.4b for the core Zoom business.
2. THE BRIDGE: If the Anthropic stake is worth ~$6b and core FCF remains above $1.1b, Zoom's underlying business may be undervalued.
3. THE VERDICT: Long Zoom as a value play on the cheap core business plus hidden AI-asset upside.
4. RISKS: Anthropic IPO valuation may not hold; Zoom's growth could decelerate; SBC-adjusted FCF may overstate true cash generation.
Timeframe: medium-term
Key Points:
- Core business valued ~16x FCF after stripping assets
- Anthropic stake could be worth ~$6b
- Q2/Q3 may book large investment gains
- SBC-adjusted FCF is key valuation debate
- Earnings next week is near-term catalyst
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I looked into Zoom, as the earnings are coming next week. A few things to note:
1. Its stake in Anthropic was valued at $1.3b in Q1, will increase to \~$3b in Q2 (based on the last funding round), but based on the IPO (assuming $1.7T), it should be closer to $6b.
Both in Q2 and in Q3, there will be huge gains coming from their Anthropic stake.
2. Its market cap is $31.5b, and 45% of it has nothing to do with the underlying business:
\- $0.9b in cash
\- $6.8b in marketable securities
\- $6.4b in investments (including Anthropic, assuming a $1.7b IPO)
**Zoom's underlying business is priced at $17.4b**.
If I treat share-based compensation as a cash expense, its free cash flow is above $1.1b (and growing).
The decision to invest in Anthropic was incredible. I am curious what the next steps will be. I would not be surprised if they sell after the IPO and use the funds to acquire other companies, buy back shares (depending on price), or just return the cash to the shareholders via dividends.
Post: [https://thefinancecorner.substack.com/p/half-of-zoom-has-nothing-to-do-with](https://thefinancecorner.substack.com/p/half-of-zoom-has-nothing-to-do-with)
Video: [https://youtu.be/284ZXwauNmI](https://youtu.be/284ZXwauNmI)
$31.5b market cap minus $0.9b cash, $6.8b marketable securities, and $6.4b investments leaves ~$17.4b for the core Zoom business. If the Anthropic stake is worth ~$6b and core FCF remains above $1.1b, Zoom's underlying business may be undervalued. Long Zoom as a value play on the cheap core business plus hidden AI-asset upside. Anthropic IPO valuation may not hold; Zoom's growth could decelerate; SBC-adjusted FCF may overstate true cash generation.