Zoom up 750% YTD and a market cap of $165 BILLION

Zoom now has a market cap of $165 billion. It's 750% YTD and trades at a price-to-sales ratio of 126. Wow! I don't remember the last time I saw a stock rip like this with that kind of valuation and market cap. It is truly impressive, but also possibly slightly overextended. I have no position, but am watching closely. Zoom has become THE barometer for economic activity and work-from-home trends.

A price-to-sales ratio of 126 makes no sense to me. Even if they double their revenue over the next 12 months, they will still have a PS ratio of 63. And then if they double their revenue AGAIN, they will have a PS ratio of 31.5. This is possible, but those are some loft expectations. But this market knows better than I and it seems a lot of people have strong conviction in these companies to continue expanding and growing. I wrote something similar about Twilio the other week and it's already up a cool 10% since. No matter how overvalued you think these companies might be, the opportunity is perfect for them to continue growing, to make acquisitions, and to invest in new areas with cheap capital.

One thing to keep in mind is that Cisco has a market cap of $165 billion. Yet they pay a dividend, have cash, and do almost 10x more in revenue. However, Cisco is not growing as fast as Zoom. The question becomes: will Zoom keep growing and taking market share from Cisco and others? Let's find out. I'll be watching and thanks for reading. I hope you found this interesting and insightful.