Market Overview

PreMarket Prep Stock Of The Day: Zoom Video

PreMarket Prep Stock Of The Day: Zoom Video

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Stock Of The Day: Zoom Video

In this market environment, earnings report and ratings changes may not have as big impact on a particular issue. If that issue is in the crosshairs of the major news influencing the markets, then those factors may be more significant.

An excellent example of this is the price action in the shares of Zoom Video Communications (NASDAQ: ZM).

What Zoom Video Does  

For those not familiar with the company, Zoom provides remote conferencing services that utilize cloud computing.

In fact, after years of testing other services, it's the platform on which the PreMarket Prep show is conducted, and it allows us to bring in guests from all over the world seamlessly.

With the outbreak of the new coronavirus and the business travel it's affecting, there is no doubt companies are turning to the company to conduct meetings and other forms of business.

Zoom's Price Action Since IPO

Since its IPO opening price of $65 in April 2019, Zoom has been a prosperous but volatile issue.

By June, it almost doubled, reaching $107.34 before plummeting to $60.97 in October.

The issue crept higher and, aided somewhat by the coronavirus news, ended January at $76.30.

With the hysteria surrounding the virus intensifying, Zoom has far surpassed its former all-time high and does not appear to be slowing down anytime soon.

Zoom's Volatile Price Action

After the close Wednesday, the company announced a fourth-quarter adjusted EPS beat of 8 cents and a sales beat of $11.71 million. 

After its inaugural earnings report, in which no estimates were available, the company has far exceeded both EPS and earnings estimates in all of those previous quarters. In addition, the company issued upbeat guidance.

No matter how good a company's earnings report may be, reporting on a day when the stock index futures are getting slaughtered presents a difficult hurdle to clear. 

After its initial after-hours dip all the way to $103 — down from Wednesday's close of $116.80 — buyers began to nibble at the issue.

By the opening of the regular session Thursday, Zoom was at the $110 area and had gone nowhere but up. As of noon, $129.83 stood as the high for the session, and the issue had backed off slightly.

Although the company is trading a ridiculous multiple to earnings, it really does not matter: it has a story in a very uncertain market environment.

And if we have learned anything over the last few years, in this bull market a "good story" can carry an issue to unimaginable levels.

Photo courtesy of Zoom. 


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