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Google Should Benefit From A Potential Zendesk Acquisition

May 02, 2022 12:05 PM ETAlphabet Inc. (GOOG), GOOGL, ZENMSFT2 Comments
Chetan Woodun profile picture
Chetan Woodun


  • Following pressure from an activist investor, Zendesk is up for sale.
  • There are many potential acquirers, but for the purpose of this thesis, I consider six which could considerably expand their customer engagement suite through a deal.
  • Out of these, if one looks beyond advertisement revenues to the less glamorous office productivity tools, Google should be the one to benefit the most from an acquisition.
  • For this purpose, a comparison with Microsoft helps to identify the margin benefits that Zendesk's digital customer experience tools could bring to Google's cloud segment.
  • Based on recent M&A data in the IT industry and the Twitter purchase by Elon Musk, I consider that Zendesk has the potential to produce another 13% upside.

CUSTOMER EXPERIENCE inscription, social networking concept. Business, Technology, Internet and network concept.

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For a growth stock with an operating loss, Zendesk (NYSE:ZEN) has been performing remarkably well since February while the wider IT sector as symbolized by the Vanguard Information Technology ETF (VGT) fell by

This article was written by

Chetan Woodun profile picture
My aim is to provide differentiated insights, whether it is for investing, trading, or informational reasons. For this purpose, I am not a classical equity researcher or fund manager, but, I come from the IT world as the founder of Keylogin Information and Technologies Co. Ltd. Thus, my research is often backed by analytics and I make frequent use of charts to support my position.I also invest, and thus, in this tumultuous market, I often look for strategies to preserve capital. As per my career history below, I have wide experience, initially as an implementer in virtualization and cloud, and I was subsequently a team leader and project lead, mostly working in telcos.I like to write around themes like automated supply chains, Generative AI, telcos Capex, the deflationary nature of software, semiconductors, etc and I am often contrarian. I have also covered biotechs.I have also been an entrepreneur in real estate ( a mediocre one), a business owner, and a farmer, and dedicate at least 5 hours per week to working on a non-profit basis. For this purpose, I help needy families by providing sponsored work and contributing peer reviews and opinions for enterprise tech.I have been investing for the last 25 years, initially in mutual or indexed funds before later opting for individual stocks. Got a lot of experience in the 2008/2009 downturn when I lost a lot due mostly to wrong advice. Since then I do my own research and have fallen in love with Seeking Alpha because of the unique perspectives it provides to someone investing hard-earned money as well as access to some of the best analysts.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

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Comments (2)

bazooooka profile picture
Zendesk in the fifties could happen
astute pathways profile picture
nice write up...Just bought some yesterday
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