Zoom Communications Inc. (ZM) traded lower on Wednesday despite exceeding first quarter 2022 estimates and raising full year forecasts. The remote meeting software provider posted profit of $ 1.32 per share, $ 0.34 better than expectations, while revenue rose 191.4% year-on-year to 956.24 million dollars, almost $ 40 million more than the consensus. The company now expects earnings per share (EPS) for fiscal 2022 of between $ 4.56 and $ 4.61 on revenue of $ 3.97 billion to $ 3.99 billion.
2021 Rotation out of COVID games
The listless reaction highlights technical and macro headwinds that will be difficult to overcome. Technically, the stock has shown a phenomenal return of 495% in 2020, triggering extremely overbought readings that predict a long-term correction. Meanwhile, the introduction of vaccines in the fourth quarter has triggered a significant rotation of COVID beneficiaries to recovery games. This momentum continued unabated until the second quarter of 2021.
CEO Kelly Steckelberg described the bull case after the post, insisting that Zoom “is evolving into a platform business that will help whatever workers do every day.” She also predicts that companies will not return to full fitness in the years to come, instead choosing “hybrid or flexible work models” that include remote options. American white-collar workers are now backing this thesis, picking up homes away from busy city centers.
Wall Street and the technical outlook
Wall Street consensus is mixed after last year’s outsized gains, giving an “Overweight” rating based on 11 “Buy”, 1 “Overweight”, 11 “Hold”, 1 “Underweight” and 1 “Underweight” recommendations. To sell “. Price targets currently range from a low of $ 250 to a high of $ 540, while the stock will open Thursday’s session almost $ 80 below the median target of $ 400. This low placement exposes a major conflict with Main Street investors, who firmly believe that Zoom is overvalued.
Zoom raised the 2019 resistance to 107.34 in February 2020 and took off in a historic uptrend that reached an all-time high at 588.84 in October. The stock has hit four lows since then, dropping more than 53% of its value at the 8-month May low. More importantly, price action broke support at the 200-day moving average in March as five attempts to move up that barrier failed, indicating that the downtrend remains fully intact.
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Disclosure: The author did not hold any position in the above titles at the time of publication.