Zoom Video Stock Isn’t A "Buy The Dip" Opportunity Yet

: ZM | Zoom Video Communications, Inc. -  News, Ratings, and Charts

Founded in 2011, the video-first communications platform Zoom Video Communications, Inc. (ZM) had stellar performance this year due to the skyrocketing demand for remote conferencing amid the stay-at-home requirements of the coronavirus pandemic. The company has become almost a necessity as several businesses have shifted to virtual communications to facilitate doing business.

Classes are being held remotely, and people are using the platform informally to catch up with friends and family. As the demand for the platform increased at an unprecedented rate during the pandemic, the company also faced security issues with so-called Zoom-bombings where uninvited users intrude on or “bomb” meetings to annoy or harass invited meeting members.

While the stock has gained 499.4% so far this year, it dipped following the positive news around the coronavirus vaccine. As the economy gradually recovers, it remains to be seen if the company will be able to retain its accounts with small businesses and larger corporations. Also, there are concerns related to ZM’s ability to maintain its lead in the post-pandemic world. This uncertainty, along with several other factors, has led our proprietary ratings system to rate the stock as “Neutral.”

Here is how our proprietary POWR Ratings system evaluates ZM:

Trade Grade: C

ZM is currently trading lower than its 50-day moving average of $456.16, but above its 200-day moving average of $350.59, indicating that the stock is neither in an uptrend nor in a downtrend. The stock’s 18.5% decline over the past month reflects a short-term bearishness.

The company delivered yet another strong performance for the quarter ended October 2020. Revenue increased 366.5% year-over-year to $777.2 million. Customers with more than 10 employees have increased roughly 485% year-over-year to 433,700. Non-GAAP net income increased 1079.4% year-over-year to $297.2 million and Non-GAAP EPS increased 1000% year-over-year to $0.99.

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