Zoom Video Communications (ZM) is falling sharply today after the company reported earnings that beat Wall Street analyst expectations, but not the expectations of investors. It happens often where the price of a stock moves so high that the company has to report far better results to maintain that price point. In the case of Zoom, it also has the ticking time bomb of a Covid-19 vaccine. While Zoom will still be a major player in the post-Covid world, growth will slow and therefore the multiple on Zoom must fall.

As a vaccine gets closer, big institutions will continue to exit Zoom and the stock will trend lower. The key level to buy is at a Zoom stock target of $325.00. This is a major gap fill (a technical level). Gaps are great trading levels, especially a big one such as this. The reason why gaps work so well is this… A large gap higher occurs when a stock gets great news and opens sharply higher. The reason investors buy the gap-fill (the level the day before the gap), is because it is a full retrace, and the investors who missed the major news get another chance to buy at the pre-news level. This gets investors excited and is the pure psychology at work.

Zoom Video Communications at $325.00 is the level smart money will be looking for. It likely will be hit by January, if not sooner. A bounce off that level will likely be large, perhaps as much as 25%.

Zoom stock target shown below at gap-fill…

(Click on image to enlarge)