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Zoom stock price on the back foot ahead of Q4 earnings

Zoom had a spectacular 2020, but as the focus moves towards reopening the economy can it find new ways to prosper?

When is Zoom’s earnings date?

Zoom reports earnings on 1 March, covering its financial fourth quarter (Q4).

Zoom earnings – what does Wall Street expect?

Zoom is expected to report earnings of 78.9 cents per share, up 425% from last year, with revenue 330% higher at $811 million. At a price-earnings (PE) ratio of 256 times trailing earnings, and 124 times forward earnings, the stock has little room for disappointment.

Rarely if ever has a company entered the international lexicon so quickly, but the lockdowns of 2020 meant that Zoom calls became a feature for a significant portion of the globe. Suddenly a company few had heard of became a global icon, surpassing Skype which had been around for many years. Having rallied 300% since 1 March 2020 investors may wonder how the company can keep the ebullient atmosphere going.

As the world returns to normal, many meetings and chats will go back to being in person rather than online, reducing demand. But it must be said that with many office workers planning to work remotely much more than before the pandemic, there will at least be continued scope for growth. How well the stock does around earnings, and beyond, will depend on Zoom’s outlook. Unlike most companies, it had a very good 2020, but keeping up that mood into 2021 will be tough.

How to trade Zoom earnings

Zoom’s average move on results day is 15.2%, as befits a high-valuation, high-growth firm such as this. Current pricing points towards a move of 12.2%. Meanwhile, of 29 analysts covering the stock, 11 have ‘buys’, with 15 ‘holds’ and just three ‘sells’.

Zoom stock price – technical analysis

Like many tech stocks, Zoom has actually had a tough few months in terms of its stock price, which has declined since its peak last year. It started the year on a weak note and managed to rally by mid-February, but it formed a lower high at $450.00 before falling back to the 200-day simple moving average (SMA) for the second time in two months.

A break above trendline resistance and above the February high would mark a more bullish development, and potentially put a move back towards all-time highs into view. Alternately, the loss of the 200-day would be a bearish development, with a drop through the $317.50 swing low marking a regime shift towards at least a medium-term retracement.

After the Zoom higher, what next?

Remote working will stay in demand for the time being, but Zoom’s valuation means it has to keep up the compelling narrative. As the market regime shifts from tech stocks towards those focused on reopening the economy Zoom will need to highlight its adaptability in the a new world that looks a lot like pre-2020.

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