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Zoom Video Communications, Inc. (ZM)

Zoom stock forecast: buy or sell

Close on Oct 23rd, 2020
$511.52 -1.73%
3 months performance
102.40%
Published: October 23rd, 2020 - 6.09pm EDT

Zoom stock outlook

  • Zoom stock fell -1.73% to close at $511.52 on the stock market today.
  • The stock is configuring an uptrend pattern since October 2019, when it bottomed at $60.97. Up to date, price marked a 738.97% profit since the beginning of this rally
  • Bank of America, BTIG Research, DA Davidson and 6 others published neutral ratings for Zoom on October 15, with an average target of $543.00
  • Zoom Video Communications, Inc. provides a video-first communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa.

Important:
The thoughts expressed in this article are personal and should not be followed as recommendations for you to buy or sell shares. The author of this text does not have an understanding of the individual circumstances of the reader, his or her own financial statements or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Comments are expressed for general educational reasons only

Zoom stock charts

Should I buy Zoom stock?

All successful traders recommend adhering to a trading strategy and not make decisions based on subjective opinions, rumors or feelings. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is $ZM stock a buy?

Currently, Zoom stock doesn't match any of these trading strategies, so our recommendation is not to buy now. This doesn't mean we expect a selloff for $ZM in the next few days, or that it may not rise higher. Simply, it doesn't match our recommended trading systems

Should I sell Zoom stock?

How to know when is it time to sell Zoom?. Just as when we have to buy shares, deciding when is appropiate to sell is not a haphazard decision, and we must use our own trading strategy. Our trading system selects very simple strategies to guide us on when is a good moment to sell a stock. Be aware that these strategies should not be used for selling short $ZM stock

As a rule of thumb, you must never mantain a trade that leads to greater losses than those expected by the time of the buy. When to sell shares should always be determined by the stop-loss (automatic or manual)

Is it time to sell Zoom stock?

In the current situation of Zoom there is not any eligible sell setup, so Zoom stock holders with operations in profit can keep their positions

Analysts' recommendations to buy or sell Zoom stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last month, 11 analyst ratings were published for Zoom. General sentiment is bullish, with 7 out of 11 publishing optimistic forecasts

Zoom ratings

Brokerage firmRating
Oct 8th, 2020
Stifel Nicolaus Neutral
Oct 9th, 2020
Mizuho Strong buy
Oct 15th, 2020
Bank of America Strong buy
Oct 15th, 2020
BTIG Research Strong buy
Oct 15th, 2020
DA Davidson Strong buy
Oct 15th, 2020
Needham & Company LLC Strong buy
Oct 15th, 2020
Piper Sandler Neutral
Oct 15th, 2020
Rosenblatt Securities Neutral
Oct 15th, 2020
Royal Bank of Canada BuyBuy
Oct 15th, 2020
Sanford C. Bernstein Buy
Oct 15th, 2020
Wells Fargo & Company

Technical analysis

Zoom shares started an uptrend on October 2019, and grew an amazing 738.97%. The price action shows higher peaks and higher lows, and along the way provided some entry points for those who wanted to invest. Latest low was in late September, when price bounced at $457.69. Like in all uptrends, price needs to take breath and currently price is moving in a range between $588.84 and $457.69

SMAs overview

A favorite tool of many technical analysts are the moving averages, that easily show market momentum. A moving average is calculated as the simple mean of the previous N periods (usually sessions). Usual time periods used for moving averages are 21 days, 50 days, 100 days and 200 days

ZM SMAs chart

Supports and resistances

Traders use support and resistance levels to identify price points in the stock price action that tend to act as barriers, containing the price of shares to move in certain direction. A support level is a level where the price tends to stop as it falls. Price is more likely to "rebound" this level rather than break through it. Nevertheless, if the price breaks down the support, it is likely to continue declining until approaching another support level. On the other side, a resistance level is where the price tends to find opposition as it rises. Again, the price is more liable to "rebound" at this level, and if it finally breaches this level, the price will rally easily until it meets the next resistance

The current resistance levels are:

  • R1: $529.74 (3.56% above)
  • R2: $588.84 (15.12% above)
  • The current support levels are:

  • S1: $478.00 (-6.55% below)
  • S2: $457.69 (-10.52% below)
  • S3: $345.68 (-32.42% below)
  • Bollinger bands

    This is an indicator that was created in the 1980s by John Bollinger. It is composed of three lines that are plotted superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    Since the price surpassed the upper band on Monday, the price has been corrected downwards by 13.13%

    ZM RSI chart

    Relative strength index

    The RSI (Relative Strength Index) is an oscillator-type indicator that track price fluctuations to identify when the share or financial asset is overbought or oversold. Like other oscillation indicators, the RSI fluctuates from 0% to 100%. The relative strength indicator is one of the best known and most widely used indicators, and it was invented by J. Welles Wilder in the late 1970s

    The RSI dropped below the overbought level of 70 on Tuesday after just crossing to the overbough zone for 1 day (weak signal). The RSI reading today was 56.68. Since then, Zoom shares tanked a 10%

    ZM RSI chart

    Earnings and financials

    In late August, Zoom ($ZM) hosted the quarterly earnings event and presented the FQ2 report. The company came out with earnings of $0.92 per share, highly improving the analysts consensus estimate of $0.45 per share.

    Same quarter one year ago, reported EPS was $0.08, so recently posted EPS means an improvement of 1050%.

    Zoom ($ZM) releases earnings report on early next December. Wall Street analysts expect an earnings per-share of $0.76, that is a 17.39% lower than previous quarter.

    ZM revenues and profits chart