Can Zoom shares find stability following upcoming Q4 earnings report?
The Zoom share price has been bearish since lockdown restrictions have started to be eased. However, if its forthcoming Q4 earnings report meets current expectations, analysts believe Zoom shares could rally in the coming weeks.
- Fifth day of losses for Zoom.
- Value down 36% from October peak.
- Can positive Q4 report reverse bearish trend?
- Want to trade Zoom shares? Open an account today.
Shares in Zoom (ZM) closed at $385.23 on 24 February. That marks a fifth consecutive day of losses for the video conferencing company. Although the overall trend has been a continued decline, Zoom is still in a better position than it was in 2019. When the Covid-19 pandemic struck, the platform’s number of daily active users jumped from 10 million to more than 200 million.
Video conferencing became the default way for businesses, family, and friends to communicate during lockdown. That pushed the Zoom share price way above previous resistance levels. From $105 in February 2020, shares broke the $200 barrier in early June before enjoying a summer of highs. Zoom shares eventually peaked in October before dropping below $500.
Have Zoom shares found their level?
The share price eventually found some stability within the $360-$400 range. It’s the upper end of this range that analysts are fixed on. Zoom’s Q4 earnings report is expected on 1 March and, if Nasdaq expectations are met, its quarterly earnings will be $0.78 per share. That’s a year-on-year increase of 420% compared to Q4 2019. Anything below $0.78 would be considered a negative performance and could, potentially, lead to another drop in value.
However, if expectations are met, it could reverse the current bearish trend. A CNN Business report shows the consensus rating among analysts is hold. Median forecasts for the Zoom share price are sitting around the $450 mark, with lows of $340 and highs of $610. A lot of where the shares move within this range will depend on the Q4 earnings report. However, the gradual easing of Covid-19 restrictions may also factor in.
Will Zoom remain relevant?
Even in a world out of lockdown, Zoom can remain relevant but, perhaps, not in the same way it was in 2020. In the UK, where Statista data shows Zoom has over 1.7 million daily active users, hopes are high that lockdown will end in June. With that being the case, people may be quick to swap video calls for face-to-face meetings with friends. A clear example of these intentions is the fact summer holiday bookings increased by 600% after Prime Minister Boris Johnson revealed his roadmap out of lockdown.
The ability to socialise in person may hurt Zoom’s bottom-line in the coming months. However, it may also remain the default meeting method for businesses. Indeed, a complete return to normality for companies may be unlikely now and, possibly, forever. For example, international travel will remain tricky and costly in the short-term, therefore, with video conferencing a more convenient and safer alternative, Zoom’s position can remain strong. The question is; will that be enough to keep shares close to $400, or will recent declines continue? Zoom’s Q4 report will offer more insight, but social conditions may have a much greater impact in 2021.
Will Zoom shares rebound following Q4 report?
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