Zoom stock price analysis: is ZM a buy ahead of earnings?

Zoom stock price has remained in a deep consolidation phase in the past few years as demand for its services waned. It has remained inside the support and resistance levels at $56.27 and $91 since 2022. 

ZM stock was trading at $78.64, down by over 86% from its highest level since 2020. In contrast, the S&P 500 and Nasdaq 100 Indices have continued rising and are now hovering near their all-time highs. So, will the upcoming earnings push the Zoom share price higher?

Zoom Communications’ business has slowed

Zoom was one of the top beneficiaries of the pandemic as most companies, schools, and other organizations embraced its technology for work and other communications. 

The past few years have been tough for the company as demand for its services waned. At the same time, the company has faced the challenge of competition as the video communication industry has become saturated. 

Some of the top alternatives to Zoom are Google Meet, Cisco Webex, Microsoft Teams, and Slack Huddles. As a standalone company, Zoom is often seen less appealing compared to other platforms that are part of a bigger company. 

The most recent results showed that Zoom Communications’ business was no longer generating the double-digit revenue growth as it used to be in the past.

Zoom’s revenue rose by 4.7% in the second quarter to $1.21 billion. Most of this revenue was in its enterprise segment, which made over $730 million. Its online revenue rose to over $484 million. 

Interestingly, Zoom Video is still adding more customers despite the challenges in its platform. The number of customers contributing over $100,000 jumped to 4,274 in the second quarter from 3,933 in the same period last year. Also, the company benefited from its international business growth.

Zoom to publish its quarterly results

The next important catalyst for the ZM stock price will be its earnings, which will come out on Monday. Wall Street analysts believe that the company’s revenue will come in at by 3% to $1.21 billion. 

They also expect the annual guidance to show that the company’s revenue will be $4.83 billion, up by 3.59% from what it made last year. 

Analysts also expect the upcoming results to show that the earnings-per-share (EPS) rose from $1.38 to $1.44. Zoom, despite its challenges, has a record of beating its earnings estimates. 

Zoom stock price technical analysis 

The weekly chart shows that the ZM stock price has remained in a tight range in the past few months. It has remained inside the range between $56 and $91. 

This performance is a sign that the stock remains in the accumulation phase of the Wyckoff Theory. A horizontal movement and low volatility characterize accumulation. 

A vertical movement usually follows this phase as the stock moves to the markup phase. This pattern means that the Zoom stock price will surge eventually. However, the Wyckoff theory can last months or even years to be confirmed.

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