Zoom Is Worth as Much as Exxon Mobil

Investing

Published: October 6, 2020 7:37 am

In 2013, Exxon Mobil Corp. (NYSE: XOM) was the world’s most valuable company as it jumped ahead of Apple with a market cap of about $416 billion. Oil prices fueled massive revenue and profits. Additionally, by revenue, it was the second-largest company in America. Zoom Video Communications Inc. (NASDAQ: ZM) was founded in 2011 and was a tiny company for nearly a decade. The two companies’ fates show how much the global economy has changed in a relatively few months.

Each company currently has a market cap of about $140 billion. Zoom’s stock is up 534% in a year. Exxon Mobil’s is down 13%.

The global oil economy has mostly collapsed, a combination of a decline in oil prices and shrinking demand. Exxon has lost money for two quarters in a row. Analyst forecast that it lost money in the quarter that just ended, as well. Exxon’s revenue was $32.6 billion in the second quarter, down from $69.1 billion in the same period a year earlier. It lost $1.1 billion, compared with a profit of $3.1 billion in the second quarter of last year.

Zoom remains a much smaller company, by far. In its most recently announced quarter, revenue was $663 million, or $145 million higher than in the same period of 2019. The company’s profit surged to $185 million, up from just over $5 million a year ago. Zoom management said its hypergrowth would continue, and the year’s revenue would be as high as $2.39 billion. Its profits could be as high as $750 million.

If fossil fuels are the global economy’s past, high-tech communications is part of its future, particularly when it is nearly impossible to travel due to the global COVID-19 pandemic. Zoom has become critical to conducting business, as have competing products from Microsoft, Google and Cisco.

Travel restrictions have taught both businesses and individuals that even when the spread of COVID-19 wanes and a vaccine is developed, people can communicate “face to face” without leaving their homes or offices. Travel is often expensive because it requires oil or products refined from it.

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