Why Zoom (ZM) is Primed for a Breakout
Zoom stock following the path of Tesla and Peloton
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$ZM 🖥 ($364.63, +2.2%)
For the past 10 months, we’ve been living in a pandemic world where we spend more time talking to our co-workers, friends, and even family members on a two-dimensional, computer screen than we do in person. This has been powered by video-conferencing and leading the pack is Zoom which reported Q3 earnings of $777.2 million or 4 times the revenue from the previous year. Since the earnings announcement, investors have pulled back nearly 60% based on fears that the growth rate cannot be sustained as we may rely less on virtual meetings in the post-pandemic world. However, there are some signs that we’ve reached the bottom and $ZM is ready for a breakout.
On a technical level, $ZM has been trading on a clear downward channel from the October highs. But in yesterday’s price action, there was a fairly large dip to the $330 levels before $ZM rallied to end the day up +5.6% on fairly significant volume. Some of this rally was driven by Cathy Wood at Ark Investments as they purchased 400K shares (roughly 7% of total trading volume), signaling a favorable entry point for the stock. There is a flattening of the 20 EMA that is also corresponding to the convergence of the 20 EMA with the resistance of the downward channel. If $ZM can breakout of this convergence point, we can see $ZM back to the upside.
Stock Techie’s take on $ZM: Beyond the technicals, the real upside catalyst is the possibility of $ZM being included into the S&P500. There have been rumors that the inclusion may be happenening later this month. Seeing how $PTON has rallied 40% and $TSLA 30% with their December inclusion into the Nasdaq and S&P500 (respectively), $ZM is a candidate for a near-term breakout.
TICKER ACTION POSITION CHANGE
$ASAN SELL +9.1%
$GRWG BUY +8.3%
$ZM BUY +25.0%Portfolio Transactions
$ASAN 📋 ($36.48, +4.3%)
Profiting $ASAN after a pop on minor news of the company being reported by Glassdoor as one of the top places to work.
$GRWG 🌿 ($50.31, -2.4%)
Continue to be bullish based on their 2021 outlook and forecast raise several days prior. Adding to the position on pullbacks.
$ZM 🖥 ($364.63, +2.2%)
First time adding to the position since initial purchase on anticipation of potential breakout.
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The above references an opinion and is for information purposes only. It is not investment advice. Seek a duly licensed professional for investment advice. Content on this site is for educational purposes only.
