When the daily active usage of Zoom Video Communications (NASDAQ:ZM) video chat surged in March, markets ignored Microsoft (NASDAQ:MSFT). Microsoft stock peaked in February at $190 and fell to the $135 range. But after corporations scattered to send office workers to work from home, Microsoft Teams became a video chat app favorite.
Why did Microsoft Teams usage soar 1,000% last month in March?
The video chat app, which supports instant messaging, file transferring, video chatting and screen sharing gave everything an office team needed. Plus, the Teams app is secure, unlike Zoom. And when voice calls were once seldom done, overall minutes rose from 900 million minutes on March 19 to 2.7 billion minutes by March 31.
The popularity of Teams will drive higher sales of Microsoft’s other offerings. Company staff may also want the Surface hardware, Windows server software, Windows OS for PC, and Office 365. So, at a 30.55 times P/E, Microsoft stock is trading at below fair value. Its revenues will likely grow at a faster pace as companies scurry to buy more licenses for staff.
Your Takeaway
Investors who missed the recent rally in Microsoft stock may not get another chance to buy the stock at a discount. When the company reports results on April 29 after the market closes, expect the company to issue a positive outlook for the rest of 2020.