Zoom Video – Downside Imminent ?

Essential Insight:

Zoom video communication has fell from an all time high of 181.26 amid security concerns. It is currently trading at 158.80

Technicals:

The Zoom stock price has fallen sharply from its high of $181.26, on a weekly timeframe it is evident that price has not been able to successfully close above its previous all-time highs at around $160. The H4 timeframe has created a strong bearish engulfing candlestick, prices are currently testing a key 8-day EMA. It is worth noting that the 8-day EMA has acted as a crucial decision zone for short term rallies, therefore it should be monitored closely.

A close below the upper resistance zone and 8-day EMA is likely to see further downside momentum with $140 as the next target, the $140 is a key short-term support. In order for further downside momentum to occur, the $140 zone needs to be broken.

Fundamentals:

COVID-19 has had a noticeably negative effect across both developed and developing economies. Most recently U.S jobless claims saw an unprecedented 22 Million people unemployed, a figure exceeding that of the financial crisis.

Companies have been forced to operate remotely, using Zoom primarily as a way to communication due to the current lockdown situation. Whilst this was a viable alternative, there have been more and more cases of security issues on the Zoom software platform. As a result, the majority of investment banks have now banned their clients from using Zoom, where the risk of confidential information being leaked has been deemed to be high with Zoom technology.

This initiative is not just with investment banks, there have been numerous reports of strangers ‘crashing’ student lectures being hosted online. It is likely that these issues will become more apparent and reflect in share prices.