TLDR
- Zoom shares surged over 11% following Baird’s analysis of its Anthropic investment value
- The video platform invested $51 million in the AI company during May 2023
- Current estimates place Zoom’s Anthropic stake between $2 billion and $4 billion
- Anthropic’s $350 billion valuation suggests a 78x return on Zoom’s original investment
- Analysts rate Zoom a Moderate Buy with a $99.11 average price target
Zoom Video Communications experienced a major rally on January 26. Shares climbed more than 11% after fresh analyst commentary shed light on a largely forgotten investment.
The catalyst came from Baird analyst William Power. His research note revealed new estimates about Zoom’s 2023 investment in Anthropic. The AI startup develops the Claude platform.
Back in May 2023, Zoom announced a strategic partnership with Anthropic. The companies kept financial details private at the time. Zoom only disclosed $51 million in strategic investments that quarter.
Power now believes that entire $51 million went to Anthropic. That seemingly modest bet has grown substantially.
Massive Returns Taking Shape
Anthropic carries a current valuation of $350 billion. Using that figure, Baird estimates Zoom’s stake could be worth $2 billion to $4 billion today. The range accounts for potential dilution.
That translates to a potential 78x return. Power called it a “hidden gem” that markets have overlooked while focusing on Zoom’s core business challenges.
Zoom rose to prominence during the pandemic as remote work exploded. The company’s growth has since cooled. Revenue expansion has slowed. The stock has struggled to regain its earlier highs.
The company has been pushing AI-related features to spark growth. Customer metrics have improved. Call volumes are increasing. The CX phone business is expanding.
IPO Speculation Builds
But the Anthropic stake may prove more valuable than these organic efforts. Anthropic has experienced explosive growth as AI demand accelerates. The company hasn’t announced IPO plans officially.
However, signals point toward a public offering. Reports suggest Anthropic hired a law firm specializing in IPO guidance. An eventual listing seems likely given the company’s scale and pure-play AI focus.
A successful Anthropic IPO would crystallize value for Zoom shareholders. It could provide returns far exceeding expectations from the original investment.
Wall Street is paying attention. Of 21 analysts covering Zoom, 13 recommend buying the stock. Seven rate it a hold. One suggests selling.
The consensus price target stands at $99.11. That implies about 4.78% upside from current levels. These targets predate the Anthropic valuation revelations.
Analysts are reassessing their models now. The Anthropic position adds a new dimension beyond video conferencing fundamentals. It provides optionality that wasn’t factored into prior estimates.
Zoom closed at $95.42 on January 26. While still below pandemic peaks, the Anthropic stake offers a potential catalyst. The investment demonstrates prescient timing as AI valuations have soared.
The $51 million deployment in May 2023 came before the AI boom reached fever pitch. Anthropic’s $350 billion valuation reflects how quickly the landscape has evolved. Zoom’s early position could generate substantial shareholder value when Anthropic eventually goes public.
The post Zoom (ZM) Stock Rises as Anthropic Stake Shows 78x Return appeared first on Blockonomi.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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