Cathie Wood’s Ark Invest says a coming ‘worker backlash’ could see Zoom skyrocket 1,263% by 2026

Zoom Video Communications (ZM) was one of the hottest stocks during the early days of the pandemic — but not anymore.

Shares have plunged 38% year to date. Over the last 12 months, they’re down a painful 68%.

But Cathie Wood’s Ark Invest sees a glorious revival in the not-too-distant future.

“According to ARK’s open-source research and model, Zoom’s share price could approach $1,500, compounding at a 76% annual growth rate, in 2026,” Wood’s team wrote in a research report last week.

Considering that Zoom shares trade at $110 apiece right now, the projection implies a potential upside of 1,263%.

Hybrid work is here to stay

When meetings and classes moved online due to the pandemic, Zoom’s business flourished.

But as the economy reopened and employees started going back to the office, there have been concerns about the growth potential of this video communications company.

Ark Invest, however, doesn’t see the hybrid work environment going away.

“Although a perceived decline in the severity of COVID-19 influenced many firms to reopen offices and reinstate 100% in-office mandates, which lowered the penetration of hybrid/remote working models to 66%, we believe that knowledge worker backlash and talent shortages will compel employers to adopt more flexible arrangements.”

Ark Invest predicts that by 2026, 75% of all global knowledge workers will participate in hybrid/remote working models, up from 51% in 2021.

Zoom’s opportunity

As one of the leading providers of video communications software, Zoom is solidly positioned for this trend.

Ark Invest’s mean projection suggests that the number of Zoom users will grow at a compound annual rate of 7%, from 212 million to 291 million by 2026. At the same time, the firm sees substantial improvement in Zoom’s ability to monetize its user base.

“Our mean projection assumes that the majority of Zoom’s users are enterprise customers, and that 50% of the total Zoom user base is paying by 2026.”

That $1,500 figure is the expected value of Zoom stock based on Ark’s simulations, but it’s not the only number worth noting. Ark Invest also provided bull and bear scenarios for the company.

Based on Ark’s Monte Carlo analysis, there is a 25% probability that Zoom could be worth $700 per share or less and a 25% probability that it could be worth $2,000 per share or more in 2026.

Considering where Zoom shares are trading at right now, even the bearish scenario implies plenty of upside ahead.

Not the only bull on the street

Ark Invest’s bullish call on Zoom is reflected in its holdings.

At the time of this writing, Zoom is the largest holding at Ark’s flagship fund Ark Innovation ETF (ARKK), accounting for 10.2% of the fund’s weight. It’s also the No. 1 holding at Ark Next Generation Internet ETF (ARKW) with an 8.7% weighting.

But Ark Invest isn’t the only firm that sees potential in the company.

Last month, Morgan Stanley analyst Meta Marshall reiterated an “overweight” rating on Zoom, saying that Zoom is “a name where investors need to search hard for a reason to not own it.” Marshall’s price target of $140 is about 24% above where the stock sits today.

Meanwhile, RBC Capital Markets analyst Rishi Jaluria has an “outperform” rating on Zoom and a price target of $150.