Zoom Video Communications Share Price Forecast September 2021 – Time to Buy ZM?
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Shares of American communications technology company Zoom Video Communications (NASDAQ: ZM) are in the red today. ZM shares closed at $254.41 as of September 29th (19:59 UTC-4). The shares enjoyed considerable growth during the pandemic, but have now fallen 51% since their high last year. However, there is a possibility that Zoom can stage a rebound, which would prove fruitful for investors interested in the company.
Zoom Video Communications – Technical Analysis
According to the financial statement from Zoom Video Communications, the market cap of the company is at $76.484 billion with total assets worth $6.509 billion. Revenue for 2020 was at $2.65 billion with a profit margin of 25.33% compared to $622.66 million in 2019.
Moving averages for Zoom Video Communications such as Exponential Moving Average (10)(273.41), Simple Moving Average (10)(274.35), Exponential Moving Average (20)(286.52), Simple Moving Average (20)(283.47) and Exponential Moving Average (30)(298.24) are pointing towards selling. On the other hand, oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(8.68), Williams Percent Range (14)(−98.93), Bull Bear Power(−30.92) and Ultimate Oscillator (7, 14, 28)(37.53) are neutral.
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Recent Developments
Zoom Video Communications is expecting a compound annual growth of 130%. Zoom shares surged during the pandemic last year, reaching an all-time high of $589 per share in October 2020. It has since fallen by more than 50%. Because of its immense successes in allowing users to engage and collaborate remotely, Zoom has played a critical role in connecting socially distanced friends, families, students, and colleagues during this pandemic. This has led some to label it as a “pandemic stock” which means it will be less relevant once the pandemic gets over.
While Zoom meetings remain the main driver of the company, it still maintains a robust portfolio of other communications solutions. These include Zoom Phone is a cloud phone system designed to eliminate costly onsite telecom hardware and Zoom Rooms, a software-based conference room system designed to transform corporate offices into collaboration suites. Zoom is also at the forefront of the massive unified communications platform as a service (UCaaS) market which is expected to reach $141 billion by 2025.
Zoom announced its intentions to acquire contact centre solutions provider Five9 back in July. Five9 has posted sales of almost $500 million in the last 12 months, providing much room for growth. The two companies will have to compete with the likes of Amazon’s AWS and Twilio, as well as 8×8, Avaya, and Cisco.
Should You Buy ZM Shares?
Investors should focus on Zoom’s efforts of entering the contact centre as a service market which is already filled with innovative newcomers and some giants. Compared to the legacy video conferencing industry, Zoom will find this market more difficult to navigate. The only reason why Zoom was able to capture the video conferencing market is due to the abysmal user interfaces and poor technical performance of existing applications. The company is also being reviewed by a committee chaired by Attorney General Merrick Garland. This will open the road for Zoom’s participation in the U.S. telecom industry, as it has already developed research hubs in China and Russia(via Five9).
As Zoom tries to keep expanding beyond its role during the pandemic, the deal, which is expected to close in the first half of next year is just another potential speed bump. However, the company’s growth will be harder to achieve given that it is now being compared to the pandemic-fuelled year of 2020. However, risk-tolerant investors can buy ZM shares at the moment, considering all of the above points.
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