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Zoom's Digital Shift Volatility

Zoom (ZM) has become a very popular and recognizable name in the stock market over the last two years. Zoom provides video and online chat services through a cloud-based peer-to-peer software platform. Their services are used for teleconferencing, telecommuting, distance education, and social relations.

 

Zoom saw a significant rise in value in 2020 but a massive decrease in value in 2021. Much of this volatile price action is attributed to the pandemic-related work-from-home orders and similar restrictions. 

 

Early on, the work-from-home orders and other restrictions immensely helped Zoom’s stock price. When restrictions eased and these orders began to be lifted, Zoom began to decline. Let’s take a closer look into how the pandemic affected Zoom positively and negatively.

 

The Rise

 

In January 2020, Zoom’s price rose nearly 13% and began its climb. During this early phase, little was known about the effects that a potential pandemic may cause. Investors speculated that work-from-home stocks would soon increase in value due to rumors of lockdowns and other restrictions. 

 

Many investors flocked to these digital stocks, explaining the abnormal share price increase in January. The digital shift had been officially accelerated.

 

On February 3rd, 2020, the United States declared COVID a public health emergency and soon began imposing restrictions. Zoom, being considered a work-from-home stock, saw nearly a 40% increase from $78 to $105 in share price during this month. 

In the following months, Zoom never slowed down as the pandemic accelerated and evolved. In October of 2020, Zoom hit its all-time-high price of nearly $590. This represents roughly a 750% increase in share price from January’s open of $70 to October’s all-time-high of $590.

 

The Fall

 

Vaccines, and overall positive news surrounding the future of the pandemic, was hitting the tape in September of 2020, and Zoom’s stock price started to feel the effects. Its massive run was suddenly met by sellers.

 

Investors were now speculating that work-from-home orders and pandemic restrictions would soon end, thus making Zoom no longer a viable investment for the return of the “normal” world. After reaching its all-time-high of $590 in October 2020, it closed the month at $460 and gave its first warning sign to investors.

 

In November of 2020, one month after its all-time-high, the price went as low as $365 per share. Buyers stepped in and ZM managed to end up 3.8% on the month, but this volatility was the second warning of what was to come.

 

In December of 2020, Zoom declined nearly 30% in value and closed the month at $340 per share. There was a small relief rally through January and February sparked by COVID variant news, but was soon brought to a halt. Zoom’s price has declined into the $120 range since then, nearly 80% off of its all-time-high. 

 

Current Performance

 

Price action aside, let’s see how Zoom has performed fundamentally. ZM is currently trading at a 29.1X forward earnings multiple. ZM has beaten the earnings consensus by 27.98% on average over the last four quarters, and in their most recent report, ZM beat expectations by 1.83%; ZM also had a sales surprise of 2.99%.

 

The consensus estimate for ZM has increased by one cent, or 0.21%, to $4.85 per share for fiscal 2022. There have been no estimate revisions within the last 60 days. ZM’s EPS is expected to grow by 45.2% for fiscal 2022 and its bottom line is forecasted to increase 19.5% over the next three to five years. 

 

ZM is much more than a pandemic play. Strong earnings have shown us that they are performing and growing as time passes. One thing that feels certain is that the digital shift is here to stay.

 

ZM has a Value Style Score of C, a Growth Style Score of A, and a Momentum Style Score of B. Its overall VGM Score is a B and is currently a Zacks Rank #3 (Hold). ZM is in the Internet-Software industry, which ranks in the bottom 32% of all Zacks industries.

 

Zoom’s Future

 

Work-from-home orders and other restrictions have significantly influenced the value of Zoom. However, during ZM’s rise and fall, they consistently beat earnings expectations and posted strong growth numbers.

 

Looking forward, a major catalyst for Zoom could be the digital shift that we witnessed and are currently experiencing. The world has been moving more and more towards a digital world for some time now due to the rapid advancement of technology.

 

Once restrictions were imposed, we saw how highly investors thought of the digital world with Zoom’s historic value increase. In due time, ZM’s meteoric rise could happen again as the world continues its shift to a more digital world.

Zoom’s Digital Shift Volatility

Zoom (ZM) has become a very popular and recognizable name in the stock market over the last two years. Zoom provides video and online chat services through a cloud-based peer-to-peer software platform. Their services are used for teleconferencing, telecommuting, distance education, and social relations.

Zoom saw a significant rise in value in 2020 but a massive decrease in value in 2021. Much of this volatile price action is attributed to the pandemic-related work-from-home orders and similar restrictions. 

Early on, the work-from-home orders and other restrictions immensely helped Zoom’s stock price. When restrictions eased and these orders began to be lifted, Zoom began to decline. Let’s take a closer look into how the pandemic affected Zoom positively and negatively.

 

The Rise

In January 2020, Zoom’s price rose nearly 13% and began its climb. During this early phase, little was known about the effects that a potential pandemic may cause. Investors speculated that work-from-home stocks would soon increase in value due to rumors of lockdowns and other restrictions. 

Many investors flocked to these digital stocks, explaining the abnormal share price increase in January. The digital shift had been officially accelerated.

On February 3rd, 2020, the United States declared COVID a public health emergency and soon began imposing restrictions. Zoom, being considered a work-from-home stock, saw nearly a 40% increase from $78 to $105 in share price during this month. 

In the following months, Zoom never slowed down as the pandemic accelerated and evolved. In October of 2020, Zoom hit its all-time-high price of nearly $590. This represents roughly a 750% increase in share price from January’s open of $70 to October’s all-time-high of $590.

 

The Fall

Vaccines, and overall positive news surrounding the future of the pandemic, was hitting the tape in September of 2020, and Zoom’s stock price started to feel the effects. Its massive run was suddenly met by sellers.

Investors were now speculating that work-from-home orders and pandemic restrictions would soon end, thus making Zoom no longer a viable investment for the return of the “normal” world. After reaching its all-time-high of $590 in October 2020, it closed the month at $460 and gave its first warning sign to investors.

In November of 2020, one month after its all-time-high, the price went as low as $365 per share. Buyers stepped in and ZM managed to end up 3.8% on the month, but this volatility was the second warning of what was to come.

In December of 2020, Zoom declined nearly 30% in value and closed the month at $340 per share. There was a small relief rally through January and February sparked by COVID variant news, but was soon brought to a halt. Zoom’s price has declined into the $120 range since then, nearly 80% off of its all-time-high. 

 

Current Performance

Price action aside, let’s see how Zoom has performed fundamentally. ZM is currently trading at a 29.1X forward earnings multiple. ZM has beaten the earnings consensus by 27.98% on average over the last four quarters, and in their most recent report, ZM beat expectations by 1.83%; ZM also had a sales surprise of 2.99%.

The consensus estimate for ZM has increased by one cent, or 0.21%, to $4.85 per share for fiscal 2022. There have been no estimate revisions within the last 60 days. ZM’s EPS is expected to grow by 45.2% for fiscal 2022 and its bottom line is forecasted to increase 19.5% over the next three to five years. 

ZM is much more than a pandemic play. Strong earnings have shown us that they are performing and growing as time passes. One thing that feels certain is that the digital shift is here to stay.

ZM has a Value Style Score of C, a Growth Style Score of A, and a Momentum Style Score of B. Its overall VGM Score is a B and is currently a Zacks Rank #3 (Hold). ZM is in the Internet-Software industry, which ranks in the bottom 32% of all Zacks industries.

 

Zoom’s Future

Work-from-home orders and other restrictions have significantly influenced the value of Zoom. However, during ZM’s rise and fall, they consistently beat earnings expectations and posted strong growth numbers. 

Looking forward, a major catalyst for Zoom could be the digital shift that we witnessed and are currently experiencing. The world has been moving more and more towards a digital world for some time now due to the rapid advancement of technology.

Once restrictions were imposed, we saw how highly investors thought of the digital world with Zoom’s historic value increase. In due time, ZM’s meteoric rise could happen again as the world continues its shift to a more digital world.

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