Scott Martin Said Zoom’s Stock Needed to Fall. Hours Later, It Did.

Kingsview Wealth Management's Scott Martin questioned Zoom's valuation on Schwab Network just hours before the company reported earnings and shares sold off.

Hours before Zoom Communications reported quarterly earnings Tuesday, Kingsview Wealth Management's Scott Martin told Schwab Network viewers that the company's transformation into an AI-focused business was worth watching — but its stock price had gotten ahead of itself.

By Wednesday morning, the market appeared to agree.

Appearing on Schwab Network's Morning Trade Live ahead of Zoom's earnings report, Martin said the company could no longer rely on the video-conferencing identity that made it one of the defining technology names of the pandemic.

“Zoom is no longer just the old kind of video conferencing company. It's about AI.”

Martin said investors should watch users and activity on the platform, but increasingly focus on margins, AI goals and the additional services Zoom can build around its calls.

He was considerably more cautious about the stock itself. With Zoom trading near the upper end of its 52-week range, Martin pointed to increasing competition from Microsoft Teams and Google Meet and said the shares looked expensive at current levels.

“The problem I have with Zoom here, though, especially given where it is in the stock price — it's near the 52-week high,” Martin said. He added that Zoom was “probably just a little bit high and dry here” and said Kingsview did not own the stock.

Asked what would make Zoom more attractive, Martin's answer was straightforward.

“Honestly, Sam, I think it's a fall in some of the price of the stock.”

That fall came only hours later.

Zoom reported quarterly results that topped expectations, but investors focused on the outlook and shares moved lower following the report.

The reaction illustrated the distinction Martin made before earnings: Zoom's business may be successfully evolving, but that doesn't necessarily make its stock attractive at every price.

Martin said the company's longer-term catalyst will be its ability to turn its AI strategy into products and services that differentiate Zoom from increasingly formidable competitors.

“Zoom's catalyst is going to be how they integrate some of the AI services,” Martin said, “and how, frankly, they're going to stay ahead of — or at least try to stay ahead of — the competitors, with Microsoft out there and Google still kind of catching up to them.”

For investors, Martin suggested patience rather than abandoning the company altogether. If the shares retreat enough, he said Kingsview could become interested.

“We don't own it yet,” Martin said, “but looking, if it drops, maybe picking up some shares.”

Less than a day later, Zoom was giving investors exactly the pullback Martin said he wanted.