Breakdown of the video chat icon before another earnings report
It’s been quite a run Zoom Video Communications Inc (NASDAQ: ZM). The Video chat staple Quickly entered the Covid-19 lexicon in March 2019 as we were all looking for ways to stay connected while staying at home or at work. Of course, in the early days of the pandemic, investors gravitated towards the stock with no end in sight to its almost daily use. But over time and a series of potent vaccines that have got people venturing out of their homes, the word itself has become less and less of a daily utterance.
Wall Street’s infatuation with Zoom began to wane shortly after the stock hit its all-time high of $ 588.84 last October. The rumble of Pfizer’s positive vaccine progress in early November devastated the stock, and later that month the stock was sunk again as optimism about the future of stay-at-home stocks overshadowed a quarterly blow fueled by the decline in corporate earnings Span.
That dramatic 15.1% post-profit drop was the worst the security has seen in the last eight sessions the next day. And with another report coming out soon after close of trading today, investors are likely pondering what’s next for the company. The stock suffered in the hours leading up to its earnings event, which recently fell 1.1% to $ 327.85 and will see a three-day winning streak late last week. Pressure to the $ 340 mark has also kept equity in check for the past two months, keeping it at a deficit of nearly 3% since the start of the year.
Back to the post-earnings reactions, the stock has seen some wild swings in the last eight reports, including its 40.8% surge in September 2020. The stock has posted an average return of 14.5% over the past two years , regardless of direction – slightly larger than the 11.7% movement the option pits are pricing in during that time.
Of course, the option volume is higher before the event. Puts and calls are almost tied, with 40,000 of the former and 43,000 of the later exchanged prior to the event – almost double the intraday average. The two most popular positions are the 6/4 300-strike put and the 300-strike call in the same monthly series. Positions are opened in both.
Meanwhile, short sellers have strengthened their positions. Short rates soared 14.3% over the last period, and now the 8.80 million stocks sold short account for a whopping 27.4% of the available free float.
The mood among brokers is fairly evenly divided. Nine covering ZM consider it a “Buy” and 10 consider it a “Hold” or worse. Meanwhile, the 12-month consensus price target of $ 426.02 is a premium of nearly 30% over current levels.