A significant shift is underway in the tech landscape as Zoom Video Communications contemplates revamping its treasury approach.
Eric Semler, the leader of Semler Scientific, has remarked on the mounting pressure surrounding the video conferencing leader, even with its substantial cash reserve of $7.7 billion.
His suggestion? Consider Bitcoin as a viable option to rejuvenate Zoom’s prospects.
The Pandemic Titan’s Unexpected Downfall
A stark contrast now shadows Zoom’s previous explosive growth during the COVID-19 pandemic. Once celebrated on Wall Street, Zoom has seen its stock decline by 40% over the past three years, significantly underperforming the S&P 500 by 73%.
Even bleaker is the firm’s five-year outlook, which trails the overall market by more than 84%; it reflects an organization striving to re-establish relevance in a post-pandemic world.
“Zoom has found it challenging to craft a compelling second act to regain its momentum, despite vigorous attempts at reinvestment and acquisitions,” Semler noted.
Bitcoin: A Daring or Foolhardy Approach?
Semler’s insights are not only garnering attention but also prompting critical discussions within financial circles. He went so far as to label Zoom’s present condition as a “Zombie” and a “sore thumb.”
His company, Semler Scientific, has already made substantial investments in Bitcoin, having acquired 3,192 BTC, including a recent purchase of 871 units for $88.5 million.
Love the buzz surrounding the Zombie Zone! There are numerous Zombie companies across various sectors, but one distinctly stands out – and it starts with Z.
Zombie Zone company #1: Zoom Communications
Why $ZM is the quintessential…
— Eric Semler (@SemlerEric) February 13, 2025
The stock price of Semler’s medical technology firm has surged over the past year, yet attributing this solely to their Bitcoin investments would be an oversimplification. With access to favorable credit conditions and an annual cash flow of $2 billion, Zoom could theoretically rise to become one of the largest corporate Bitcoin holders virtually overnight.
BTCUSD trading at $97,035 on the daily chart: TradingView.com
Navigating Corporate Treasury Strategy in a Crypto-Driven World
The debate revolves around a fundamental question facing modern enterprises: how should they manage their treasury amidst a surge in digital assets?
Zoom finds itself in a paradoxical situation – it boasts a robust 40% EBITDA margin and generated $458 million in cash last quarter, yet it trades at conservative multiples of 15x forward earnings and 9x forward EBITDA. With roughly a third of its $25 billion market cap held in cash, there are both opportunities and challenges ahead.
The Impact of a Single Decision
At the heart of this potential transformation is Eric Yuan, Zoom’s founder and CEO, whose special voting shares grant him significant sway over the firm’s decisions.
Yuan has yet to publicly comment on Bitcoin, while industry leaders such as Tesla and MicroStrategy have adopted it as a hedge against inflation.
His choice could either reinforce traditional perspectives on cash holdings or ignite a profound shift in corporate treasury management.
Shareholders are seeking transparency and growth, but Zoom stands at a crossroads between innovation and tradition. The dilemma extends beyond Bitcoin; it questions if a company with solid foundations but stagnant progress should delve into the unpredictable cryptocurrency sector to enhance its market position.
As the story unfolds, all eyes are on Yuan and his forthcoming decisions in this high-stakes corporate strategy game.
Featured image from Gemini Imagen, chart from TradingView
