Michael Wiggins De Oliveira
Deep Value Returns, Equity Investing without Options or Leverage
RingCentral could reach $80 by the end of 2027 as investors come to see it as a durable cash-generating software company rather than a declining communications business. That requires 4-5% revenue growth, GAAP margin expansion ahead of schedule, debt cut to about $1 billion and proof that AI expands rather than replaces its platform. At just 7x forward free cash flow with improving profitability, it is an overlooked value stock that can deliver exceptional returns. x.comÂ
RingCentral fits the Stage 2 pattern: EPS has grown steadily, and estimates for the next three years are expected to accelerate almost exponentially. @FranVezz also points to a tremendous weekly breakout in the stock. x.com x.comÂ
RingCentral should earn a higher multiple than HubSpot because a business growing 5% but stable is worth more than one growing 15% but slowing. x.comÂ
RingCentral's valuation looks difficult to justify given its modest growth and stock compensation. Its $240 million in SBC is roughly 40% of the cash flow it promotes; the implied opening price is about 22-23x cash flow and 85x GAAP earnings as growth moves only from 5.5% to 6%. AI ARR has had only a marginal impact on the overall business, while earlier profitability gains came from cutting bloated costs. x.comÂ
Five9, 8x8 and NICE can all rerate toward RingCentral's valuation on their new agentic products in unified communications and contact-center software. x.comÂ
Zoom's stake in Anthropic and others, now valued at $3.7B, would have to be marked up to over $6B if Anthropic goes public at about $2T. Zoom beat on revenue, billings and EPS, though operating margin was slightly light and guidance was in line. It holds $7.2B of cash, generates $1.8B of free cash flow for about a 10% FCF yield on EV, and bought back $360M of stock. It is no longer an online churn story but an enterprise revenue story. x.comÂ
