top of page
  • Writer's pictureRobert Baharian

This one chart...David & Goliath

They trade at a multiple of almost 42 times their earnings, more than double the S&P's average of almost 19 times. Investors are falling over each other to get their hands on the Blue Chip companies - all with proven records of growth. Amongst them, IBM, Xerox, General Electric, Avon Products, Polaroid, and Eastman Kodak. What followed was a decline in investment by 60%. This was 1972.

IBM was founded in June of 1911. Almost 110 years later, the company has a market capitalisation of around US$109 Billion.

Zoom was founded in April of 2011. Not even 10 years later, the company has a market capitalisation of around US$105 Billion - topping out at US$160 Billion only last week.

IBM reported quarterly earnings of US$18.1 Billion, and net income of US$1.36 Billion down 46%.

Zoom reported quarterly earnings of US$663 Million, up 169% from the previous year, and net income of US$186 Million.

Zoom has 769 customers paying them over $100,000, up 90%. The company has 246,400 customers with more than 10 employees, up 354%. If Zoom were in the S&P 500, which is not, it would be a top 100 company.

Never have I seen something of that magnitude in my 20 years of covering technology. - CNBC analyst

The pace of which we are seeing companies grow and become this wildly profitable is truly unprecedented. Whats more, the financial and economic backdrop makes this completely unimaginable. Yet here we are. This is why the stock market is not the economy and the economy is not the stock market.


bottom of page