Hot rocket Zoom Video Communications, Inc. (ZM) reports earnings after Tuesday’s closing bell, with Wall Street analysts expecting earnings of $0.10 per share on $202.5 million in the first quarter of 2020 sales. The remote conferencing company beat top – and bottom-line fourth quarter of 2019 estimates at the beginning of March, the outbreak of the narrow range of action, to the front of a momentum fuelled by advance which has added about 60% in share price in five sessions.
The high volatility set in motion after the disclosures regarding the confidentiality and security holes exposed to millions of users. The stock has recovered after two major declines, but the price rate of change has slumped badly in the last two months, adding just 15 points to the early March peak. The Accumulation of readings are lagging behind, with many traders and investors choosing to take profits and hit the button.
The security Issues Still in the Game
Zoom responded with a series of initiatives to address the security flaws, but many analysts believe that customers have moved to other video platforms, including Facebook, Inc.’s (FB) place of Work and Microsoft Corporation (MSFT) Teams. The impact of the controversy is difficult to assess in advance of this week’s confessional because that Zoom has provided some metric of the user from disclosure of the information.
In addition, the Americans and the Europeans are slowly heading back to the physical places of work, reducing the need for conference services. As we have seen with other companies that have benefited from the pandemic, the judgments, the market players have been dumping shares after the first quarter, the releases and the transition of the capital in the beaten track of the companies that have grown relatively cheap due to the first quarter of the destruction.
The accumulation pattern raises a red flag, trim in March and entering into a distribution phase, which has carved two lower highs even though the stock is now trading at a few points in the month of April all-time high at $181.50. However, it is not predictive without confirmation by other indicators, and momentum or the relative strength readings are showing signs of slowing down or rolling over.
ZM Daily Chart (2019 – 2020)
The creation of the public company, at $65.00 in April 2019 and the immediate entry of the upward trend in the head to just above $100 in June. The stock is then input into a persistent decline, cutting through the ipo of the opening of print in October, before falling back to $63.74, before a successful test of the low in December. The increase in subsequent stalled in the middle of$70 in January, which gives a short-term consolidation, followed by a strong February rally.
The upward trend has completed a round of travel in the 2019 high on Feb. 20, in advance of an escape that has generated exceptionally high volatility and counter-movement. The stock carved three highest and the two lowest in April peak and rolled, adding a third more weak on the 1st of May. The price action has calmed down over the past month, with a steady but less dynamic, slight rise in failing to reach the April high.
The balance volume (OBV), the accumulation-distribution indicator posted an all-time high at the end of March, a month in advance, prices, and entered into a decline that is carved with the distribution of the two waves at the end of the month of April. Purchasing power since that time has failed to erase the deficit volume, and the OBV is still below the March, April, and May of the vertices. Given this set-up, the company may need to blow away expectations at the publication of the results of generating the purchase of the interest or the risk of a reversal which reaches the 50-day exponential moving average (EMA) below $150.
The Bottom Line
Zoom stock climbed higher by 2020, underpinned by the sars coronavirus pandemic, which has forced many companies around the world, to send home the employees and move on to the video-conference. Although this change of paradigm is expected to generate a permanent increase in income, total eyeballs may fall as a lot of people to return to work at the physical locations.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.