×
S&P 500   3,888.83 (+1.14%)
DOW   31,246.13 (+0.67%)
QQQ   293.73 (+1.71%)
AAPL   145.62 (+1.89%)
MSFT   267.47 (+0.47%)
META   171.40 (+0.96%)
GOOGL   2,354.99 (+2.77%)
AMZN   116.23 (+1.66%)
TSLA   731.95 (+5.29%)
NVDA   157.73 (+4.25%)
NIO   22.38 (+7.44%)
BABA   123.01 (+3.27%)
AMD   78.82 (+4.61%)
MU   58.36 (+1.73%)
CGC   2.70 (+1.89%)
T   21.14 (+0.24%)
GE   62.32 (+1.22%)
F   11.58 (+4.70%)
DIS   96.69 (+0.63%)
AMC   14.07 (+11.93%)
PFE   53.23 (+0.91%)
PYPL   74.39 (+1.57%)
NFLX   188.43 (+2.37%)
S&P 500   3,888.83 (+1.14%)
DOW   31,246.13 (+0.67%)
QQQ   293.73 (+1.71%)
AAPL   145.62 (+1.89%)
MSFT   267.47 (+0.47%)
META   171.40 (+0.96%)
GOOGL   2,354.99 (+2.77%)
AMZN   116.23 (+1.66%)
TSLA   731.95 (+5.29%)
NVDA   157.73 (+4.25%)
NIO   22.38 (+7.44%)
BABA   123.01 (+3.27%)
AMD   78.82 (+4.61%)
MU   58.36 (+1.73%)
CGC   2.70 (+1.89%)
T   21.14 (+0.24%)
GE   62.32 (+1.22%)
F   11.58 (+4.70%)
DIS   96.69 (+0.63%)
AMC   14.07 (+11.93%)
PFE   53.23 (+0.91%)
PYPL   74.39 (+1.57%)
NFLX   188.43 (+2.37%)
S&P 500   3,888.83 (+1.14%)
DOW   31,246.13 (+0.67%)
QQQ   293.73 (+1.71%)
AAPL   145.62 (+1.89%)
MSFT   267.47 (+0.47%)
META   171.40 (+0.96%)
GOOGL   2,354.99 (+2.77%)
AMZN   116.23 (+1.66%)
TSLA   731.95 (+5.29%)
NVDA   157.73 (+4.25%)
NIO   22.38 (+7.44%)
BABA   123.01 (+3.27%)
AMD   78.82 (+4.61%)
MU   58.36 (+1.73%)
CGC   2.70 (+1.89%)
T   21.14 (+0.24%)
GE   62.32 (+1.22%)
F   11.58 (+4.70%)
DIS   96.69 (+0.63%)
AMC   14.07 (+11.93%)
PFE   53.23 (+0.91%)
PYPL   74.39 (+1.57%)
NFLX   188.43 (+2.37%)
S&P 500   3,888.83 (+1.14%)
DOW   31,246.13 (+0.67%)
QQQ   293.73 (+1.71%)
AAPL   145.62 (+1.89%)
MSFT   267.47 (+0.47%)
META   171.40 (+0.96%)
GOOGL   2,354.99 (+2.77%)
AMZN   116.23 (+1.66%)
TSLA   731.95 (+5.29%)
NVDA   157.73 (+4.25%)
NIO   22.38 (+7.44%)
BABA   123.01 (+3.27%)
AMD   78.82 (+4.61%)
MU   58.36 (+1.73%)
CGC   2.70 (+1.89%)
T   21.14 (+0.24%)
GE   62.32 (+1.22%)
F   11.58 (+4.70%)
DIS   96.69 (+0.63%)
AMC   14.07 (+11.93%)
PFE   53.23 (+0.91%)
PYPL   74.39 (+1.57%)
NFLX   188.43 (+2.37%)

Zoom Video Communications Is Primed To Launch Higher 

Tuesday, May 24, 2022 | Thomas Hughes
Zoom Video Communications Is Primed To Launch Higher 

The Zoom Video Communications Selloff Is Overextended 

Shares of Zoom Video Communication (NASDAQ: ZM) have done little more than move lower since hitting the pandemic peak way back in 2020 but the selling may be over. The stock is finally trading at a more reasonable if still above-the-market-average 25X its earnings and outperforming at all levels. We ourselves were skeptical of this company’s future in the post-social-distancing world and we have been proven wrong. Not only is Zoom Video Communication proving itself to be a player in today’s digitally connected world but also to be a cash-generating powerhouse. 

Zoom Video Communications Beats And Raises 

Zoom Video Communications had a great quarter producing $1.07 billion in revenue for a growth of 11.9% over last year. The revenue was only as expected relative to the Marketbeat.com consensus but it is accompanied by a better than expected margin so we’ll give them a pass. Internally, the metrics are good as well and point to continued momentum in the business. The company reports the number of clients contributing more than $100K is up 46% on a TTM basis while Enterprise clients are up 24% and compounded by a 124% increase in net dollar expansion. 

Moving down to the margin, there was some margin compression but far less than anticipated. The company reported a 17.4% GAAP operating margin that, when adjusted for stock-based compensation, related charges, and other charges becomes a more robust 37.2%. On a cash-from-ops and FCF basis, margins came in at 49% and 46% while on the bottom line the $1.03 in adjusted EPS beat by $0.16.


It was the guidance, however, that really caught our attention. The company is maintaining its previous guidance for revenue of $4.53 to $4.55 billion versus the $4.54 consensus but raised the guidance for earnings. The company is now expecting $3.70 to $3.77 in adjusted EPS versus the Marketbeat.com consensus of $3.57 and there is upside risk in the outlook. The company is showing obvious momentum that is aided by the rollout of new offerings and cross-selling that should drive margin expansion. 

The Institutions Are Scooping Up Zoom Video Communications 

The institutional activity has been vigorous on both sides of the equation but net-bullish since the IPO. The sell-side reached a crescendo in Q2 2022 but that was matched by an increase in buying that has total institutional holdings up to nearly 56%. Based on the Q1 results, we think selling may slow down and buying pick back up and there is other big-money activity to be aware of as well. Cathie Wood and her crew at Ark Invest bought another almost-100,000 shares bringing the total held in the Ark Invest Innovation ETF up to $669 million on an as-purchased basis. The stock is now the 3rd largest of the ETF’s holdings at 7.97%. 

The Technical Outlook: Zoom Video Communications Could Gain 100% Or More 

The selloff in Zoom Video Communications may not be over but it is overextended and ripe for a reversal. When it comes, if that is not now, we see the potential for triple-digit gains in the stock. Not only do the analysts have it pegged at $175 for a gain of 95% but the outlook is favorable, cash flow is strong, the balance sheet is sound, and there is a relatively high short interest. The 5% short interest isn’t enough to fuel a short-squeeze but it is enough to get a short-covering rally started and, once begun, we see a full reversal following. Until then, we are marking the $80 level as a possible bottom. 

Zoom Video Communications Is Primed To Launch Higher 

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Zoom Video Communications (ZM)
2.9609 of 5 stars
$120.48+2.9%N/A29.24Moderate Buy$169.42
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in Zoom Video Communications right now?

Before you consider Zoom Video Communications, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Zoom Video Communications wasn't on the list.

While Zoom Video Communications currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

Free Email Newsletter

Complete the form below to receive the latest headlines and analysts' recommendations for your stocks with our free daily email newsletter:


Most Read This Week

Recent Articles

Search Headlines:

Latest PodcastIs The Market Near a Bottom, Does it Matter?

Today’s interview is a little different, in that you get a LOT of market perspective from someone who’s been analyzing stocks from the ground up, for more than three decades. In this conversation, Kate chats with Nancy Zambell, the chief analyst for the Cabot Money Club Letter - and Nancy has a really deep and varied background in the financial industry - as she mentions in this interview, she’s been a banker, real estate professional, and a stock market analyst.

MarketBeat Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau MarketBeat is rated as Great on TrustPilot

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at contact@marketbeat.com | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.