Eric Semler, Chair of Semler Scientific, has urged Zoom Communications to leverage its substantial cash reserves of $7.7 billion for investment in Bitcoin. Semler believes this strategic shift could significantly enhance growth and shareholder value.
He referenced his own firm’s success in accumulating 3,192 BTC, valued at approximately $305 million, which has played a crucial role in doubling its stock price over the past year.
Semler characterized Zoom as a “Zombie Zone” company, highlighting its disappointing market performance. In the past three years, Zoom’s stock has fallen approximately 40%, underperforming the S&P 500 by about 73%. Over the last five years, the underperformance is even more striking, with Zoom lagging the S&P by about 84%. Despite showing a forward earnings multiple of 15x and a forward EBITDA multiple of 9x, Semler pointed out that Zoom’s valuation remains low due to stagnant growth.
Zoom currently possesses $7.7 billion in cash, which makes up nearly one-third of its $25 billion market capitalization, yet it lacks a clear investment strategy. The company maintains healthy profitability, boasting around 40% EBITDA margins and generating $458 million in cash last quarter. However, its revenue growth forecast remains bleak, projected in the low single-digit percentage range.
Semler proposed that by adopting a Bitcoin treasury strategy, Zoom could emerge as one of the largest corporate holders of Bitcoin, benefiting from its annualized free cash flow of $2 billion and access to low-cost debt facilities. He stressed that the decision ultimately lies with Zoom’s founder and CEO, who retains significant control over the company’s strategic direction, even though there has been no public indication of interest in Bitcoin from him.
