Why Zoom Video’s Sky-High Stock Will Fall to Earth When Pandemic Ends

No matter how the pandemic ends, one thing is certain: Zoom Video has become a household name as people flock to it to connect with work colleagues, family and friends. That has helped send Zoom stock into the stratosphere—it is up 46% in the past five weeks even as the overall market has fallen 25%. But like the pandemic itself, this isn’t a rally that can last.

Just how staggering has Zoom’s run-up been? Zoom’s enterprise value—its market capitalization less net cash—is about 45 times this year’s expected revenue. Slack, whose workplace chat product has also taken off as more people have been working from home, has seen its stock rise only about 4% in the past few weeks and is now trading at about 17 times this year’s revenue. Atlassian, which sells another workplace collaboration tool, is also trading at about 17 times revenue.