Zoom Stock Drops 11%. Is ZM Stock A Buy?

ZM Stock Chart

Yesterday Zoom Video Communications, Inc. (NASDAQ: ZM) stock dropped to 121.93 (11%), adding to a nearly 27% drop from the recent high. Investors saw ZM surged this year from $67 to $159 per share because companies were looking for remote solutions due to the coronavirus.

Zoom has seen an increase in users from 10 million a day in December to nearly 200 million since the coronavirus.

Yesterday, Eric Yuan, Zoom’s CEO,  apologized for the security lapses that have been reported this week.  Zoom is actively addressing the concerns and has outlined what the company is doing to fix those problems.

The latest news today on the coronavirus is increasing to nearly 250K people that Dr.Fauci is encouraging everyone to stay inside and that all states should be locked down. This will mean that systems like Zoom will likely continue to see an increase in demand for their services.

What is Zoom Video Communications?

Zoom Video was founded in 2011 and headquartered in San Jose, California. Zoom is one of the most popular online teleconference systems for businesses right now. Their connects people and business through frictionless video, voice, chat, and content sharing.

ZM serves all sectors of business, including the education, entertainment/media, non-profit, healthcare, finance, manufacturing, retail/consumer products, and software sectors, as well as individuals.

Should Investors Buy Zoom Stock?

Many investors are asking themselves, is ZM stock a buy? The answer is no, ZM stock is not stock to buy right now. Investors should look at adding ZM to their watch list.  ZM stock will likely bounce up today because it is actively addressing the security concern, but unfortunately this could quickly turn into a pattern.  Long term investors may want to wait for this stock to stabilize.

The reason why it is not a buy is that Zoom’s stock rose on the coronavirus, which caused it to rise very high based on momentum, versus technicals and fundamentals. Momentum based stocks can be very risky to investors because, like Zoom, they can go up very fast, but also down just as fast.

Stock Market Morning Report

S&P futures are lower, down 21 to 22 points, as…

  • The U.S. coronavirus death toll hit 1,000 in a day for the first time as total fatalities were greater than 5,900 and total infections exceeded 244,000.
  • Many U.S. banks voiced concern to the White House about participating in the small-business loan program due to financial and legal risks.
  • A Congressional Budget Office report indicated domestic second-quarter gross domestic product data would fall by more than 7% due to the negative impact of the coronavirus.
  • Investors await jobs data for March as a gauge on domestic economic growth.

European markets declined as…

  • The OPEC+ coalition has scheduled a meeting for Monday to discuss additional oil production cuts and want other nations to join.
  • The number of global COVID-19 infections surged past 1 million as the death toll neared 54,000.
  • The Dutch National Bank urged insurers to suspend their dividend payments and share buyback plans.

Asian markets fell as…

  • The Asian Development Bank said the coronavirus outbreak could cost the world anywhere between $2 trillion and $4.1 trillion depending on the severity of the outbreak.
  • The Bank of Japan was said to be easing its exchange-trade fund purchases after four days of record purchases in March.
  • Caixin China services purchasing managers’ index data for March was stronger than expected and rebounded versus February but still remained in contraction territory.
  • Markit Japan services purchasing manager’s index data for March showed new exports orders fell by the most on record, signaling global demand is worsening.

And ahead of…

  • Preliminary hourly Earnings for March (8:30 a.m.)
  • Preliminary Average Workweek for March (8:30 a.m.)
  • Manufacturing, Nonfarm, Private Nonfarm Payrolls for March  (8:30 a.m.)
  • Unemployment Rate for March (8:30 a.m.)
  • Markit U.S. Final Composite PMI for March (9:45 a.m.)
  • Markit U.S. Final Services PMI for March (9:45 a.m.)
  • ISM Non-Manufacturing for March (10 a.m.)
  • Baker Hughes Rig Count Data (1 p.m.)
  • CFTC Commitment of Traders Report (3:30 p.m.)

Pre-Market Levels:

S&P -0.87%

Asia – Japan’s Nikkei +0.01 %, Japan’s TOPIX -0.36%, China’s Shanghai Composite -0.60%, Hong Kong Hang Seng Index -0.19%, South Korea’s KOSPI +0.03%, Taiwan’s TSE Closed

Europe – EuroStoxx 50 -0.49%, UK FTSE -1.26%, German DAX -0.20%, French CAC -0.80 %, Italian MIB -1.18%, Spanish IBEX +0.32%

VIX -10.11%

Currencies – Dollar +0.47%, Japanese Yen -0.62%, Euro -0.56%, British Pound -1.07%, Swiss Franc -0.37 %, Chinese Yuan -0.09%

Bitcoin +2.99%

WTI Crude +4.42%

Brent Crude +8.05%

Nat Gas +1.42%

Gold -0.54 %

Platinum +1.92%

Copper -0.56%

Silver -0.47%

US Treasury 10 yr yield -0.1bps at 0.596%

US Treasury 2 yr yield -0.8bps at 0.217%

German 10 yr yield +0.4bps at -0.438%

French 10 yr yield +1.5bps at 0.050%

Italian 10 yr yield +3.2bps at 1.492%

Japanese 10 yr yield +0.1bps at -0.026%

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