Zoom changed the face of the pandemic, quite literally enabling remote work at scale and leading us into a hybrid work environment. While I’m not a fan of the stock at these levels, their entry into advertising is huge.
Zoom is piloting showing ads to users on its free “Basic” tier, the company has announced in a blog post. While Microsoft is the early favorite to building the corporate metaverse companies like Zoom will be stiff competition.
Zoom Video Communications, Inc. (NASDAQ:ZM) was in 59 hedge funds' portfolios at the end of the second quarter of 2022. The all time high for this statistic is 59.
How Good Will Ads be?
Ads will appear on the browser page shown to users at the end of a call. Zoom says ads are being rolled out to free users in “certain countries,” though its blog post doesn’t detail exactly which these are. Users on the service’s Basic tier will only see ads if they join a meeting hosted by another Basic tier user.
While LinkedIn continues to deteriorate in information quality, Zoom could flourish with B2B Ads.
Although ads won’t be shown during meetings themselves, it’s still a potentially big shift for the videoconferencing service. Zoom has typically imposed only minor restrictions on its free tier, which helped the service explode in popularity last year as people around the world adapted to working and socializing from home. The company is already very profitable.
Zoom has spent the last year focused on being more than just a popular video conferencing tool. Earlier this year, the company launched a $100 million fund to invest in companies building applications based on the company’s platform. Zoom recently made its first round of investments as part of the fund.
Zoom is one of our insider-picks to build the corporate metaverse. JPMorgan says it’s time to buy Zoom Video after shares get cut in half from pandemic heights. I would not buy at these levels, quiet yet. But I see the great potential here.
The targeting of LinkedIn Ads has always been relatively poor. This means for the B2B Ad space Microsoft can be disrupted. Microsoft making cute avatars in Teams is not building the metaverse.
Zoom is rapidly maturing with M&A. In terms of acquisitions, the company recently announced plans to acquire German startup Karlsruhe Information Technology Solutions or “Kites” for short, to bring real-time machine learning-based translation to its platform. Zoom had also planned to acquire Five9, a maker of cloud-based customer service software, but the deal was subsequently called off.
Until now, arguably the biggest restriction on Zoom’s free tier is its 40-minute limit on the length of group calls.
Zoom is emphasizing that it won’t be using “meeting, webinar, or messaging content (specifically, audio, video, files, and messages)” to target ads.
If Zoom can get Ads right it will be even more profitable and have the cash flow to become a major player in the corporate metaverse. It could then get acquired by someone like ByteDance, one day.
Microsoft is successful in the corporate metaverse because Silicon Valley is in a vacuum of innovation. It’s simply winner-takes-all mode now. So we have to look at fresher companies who are more innovative that will eventually make breakthroughs that enable them to become legendary businesses. I think Zoom has this momentum.
You can read Zoom’s blog about this here. Nobody is closer to the metaverse worker today than Zoom. To think this is a Meta vs. Microsoft story is just plain wrong. Microsoft is entering the race to build a metaverse inside Teams, just days after Facebook rebranded to Meta in a push to build virtual spaces for both consumers and businesses. But there are other brands that will be more pivotal than either in the Corporate Metaverse.
I would consider buying Zoom under $200, but I wouldn’t touch it near $300. Basic users can take part in as many meetings as they like, but there are time limits of 30 minutes on one-on-one calls and 40 minutes on group meetings. As Zoom matures, we’ll know more about how serious they could be in the corporate metaverse, but I think their potential ceiling is very high. I also hope their shor interest volume according to short interest API goes down a bit, which would indicate strong confidence from investors.
v. 4.20
