Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Is Zoom worth $484 a share?

Zoom is living an ‘American dream’ since the beginning of the coronavirus pandemic. Compared to last year, its revenue has more than tripled while its share price is up 610% year-to-date. Its success story could continue.

Zoom share price Source: Bloomberg
  • Zoom’s share price is up 611% year-to-date and remains in Wall Street analysts’ good books
  • However, the company’s customer portfolio will have to remain under surveillance, says JPMorgan.
  • Yet Zoom stocks should keep rising as the coronavirus pandemic continues to escalate
  • At its current $484 share price, is Zoom worth ‘buying’?

Zoom stock: a pandemic success-story

Zoom Video Communication is among several American stocks that have greatly benefited from the pandemic crisis. Up 611% from the beginning of the year, its share price is currently trading at $484 on the Nasdaq when it was only worth $66 on January first.

With the coronavirus pandemic, Zoom’s videoconference services have been adopted by a significant number of new customers these last six-months. As businesses have sought to find a quick, affordable and reliable way to continue their activities during lockdown, Zoom’s solutions have become an international reference in the online-meetings sector.

At the end of its second quarter, Zoom had increased the number of its paid customers by 458% year-over-year, generating a 355% increase of its total revenue. With such profitable results, its share price naturally exploded. Its earning per share for the second quarter came in $0.63, which marks a 3050% improvement in a year.

Zoom is worth its current price, according to Wall Street

Even after its spectacular ascension, the overwhelming majority of brokers are keeping a strong bullish outlook on Zoom share price. As Zoom’s second quarter revenue and earnings smashed Wall Street estimates by 33% and 104% respectively, its share price further skyrocketed, leading the analysts to raise their 12-months price target on the company.

After Zoom’s Q2, BTIG upgraded its rating to a ‘buy’ from ‘neutral’ with a target price of $550 a share, noting that Zoom’s performance outpaced from far its peers in the Unified communications as a service (UCaaS) space.

JPMorgan upgraded its rating at ‘overweight’ and raised its target price from $220 to $425. RBC held its rating at ‘buy’ and rose its target price from $300 to $450. The bank believes that Zoom’s global wide spread adoption is just beginning, its analysts having ‘greater conviction in the company’s ability to capitalise on both near- and long-term opportunities’.

Reuters consensus is currently at a ‘buy’ rating. Among the pool of analysts, Zoom target price goes from $350 to $735.

Considering that Zoom’s share price is currently at $484, the Wall Street consensus seems quite confident that it will keep its upward trajectory, even if the tech sector could lose some steam before year-end following its incredible rise over the summer.

On a technical-side, the trend is also bullish, as Zoom share price is trading above its 50-day ($328, purple line) and its 200-day ($189, red line) moving averages :

Zoom share price Source: Refinitiv Eikon/IG
Zoom share price Source: Refinitiv Eikon/IG

Zoom’s client portfolio is raising some concerns at JPMorgan

However, a handful of analysts say that Zoom’s client portfolio will have to remain under surveillance in the coming months. JPMorgan pointed out that the company’s customers with less than 10 employees (and which have a high churn rate) reached 36% of total revenue in the last quarter.

The over representation of this group of customers in Zoom’s address book increases the risk of a pull-back in revenue once Covid-19 dissipates, warn JPMorgan’s analysts.

On the other hand, Zoom’s second quarter publication showed that its client portfolio is also gaining some tracks among bigger companies. In three months, the videoconferencing specialist added 988 customers contributing more than $100 000 to its revenue, up 112% year-over-year.

If this trend continues, it could lower the risk attached to Zoom’s small business customers and balance its customer portfolio.

The current coronavirus situation gives extra-insurance to Zoom’s upward trend

For now, Zoom’s near-term future seems to be confirmed by the uprising coronavirus cases around Europe and, to a lesser extent, in the United States of America.

With the uprise in cases in Europe, a lot of countries have recently tightened their social-distancing rules. This mean a lot of businesses must retain their ‘work-from-home’ rhythm; a situation that is reliant on Zoom and other ‘stay-at-home’ stocks.

Furthermore, this situation could last for months. Research on a coronavirus vaccine are still a work-in-progress and the first treatments won’t be available before 2021. By then, international specialists fear that economies will have to adopt another period of lockdown, especially ahead of Christmas-time; a high-risk period as people will be reunited with their families.

With this backdrop, Zoom should easily reach its 2021 objectives, targeting a 30% revenue rise from 2020.

How to trade US tech stocks with IG

Are you feeling bullish or bearish on Zoom and other US tech stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's world-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Zoom Video Communications Inc> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on stock opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access
Learn more

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off
Log in now

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform
Log in now

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Take advantage

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.