The market being $50B means there are $50B of sales to do per year.
Market cap is a multiplier of revenues, easily 10 or 20 for a tech company, that means a $1T market cap to be taken across the videoconference companies.
Wondering how numbers can be so high? Count $10 per month * 12 months in a year * 100 million employees in the US... that is $12B per year going to video software!
Actually, price / earnings (P/E ratio) is typically 10-20 for _any_ company in the S&P 500. When you look at big tech, the numbers are drastically higher:
- AMZN: 92
- GOOG: 34
- FB: 33
- NFLX: 76
- AAPL: 35
- MSFT: 35
Compare this to, say, 3M, at 19, or GM with 17.
edit: incidentally, apparently Zoom's P/E is... 527, which is grossly inflated even for a tech company. Tesla is also in the same category with a P/E of 834.
It is, but markets can stay irrational longer than you can stay liquid to paraphrase somewhat famous quip. I was also one of those people who tried shorting TSLA since I believe they are way overvalued. I agree with you, but the market has spoken.
P/E ratio formula is listed above correctly, however, earnings is earnings per share, not revenue. So the parent's market valuation rationale is whacky.
Side note - Go read about Japan's lost decade and you'll see how dangerously close our (US) current speculative investing environment is to theirs before it fell.
Market cap is the paper value of the company. It has little to do with the market. Zoom’s planned pivot is into boring markets like business VoIP.
Zoom went bananas because they won the space at a point in time that mattered. FaceTime is too proprietary and lacks features due to E2E, WebEx is run by incompetents, Google Meet is hard to use, and Teams is too complex. There’s a thousand other competitors with a few users.
Speculators poured billions into the consort and the valuation went nuts. That could go away in a week.
Market cap is a multiplier of revenues, easily 10 or 20 for a tech company, that means a $1T market cap to be taken across the videoconference companies.
Wondering how numbers can be so high? Count $10 per month * 12 months in a year * 100 million employees in the US... that is $12B per year going to video software!