Zoom Video Communications, Inc. (ZM) broke out technically just before the start of the NFL Draft and continued its stealth move higher on Friday - that is, until Facebook (FB) announced that they wanted to join the video meeting party. ZM traded as high as 181.50 intraday on Friday, an all-time high, before it saw a rapid afternoon decline after Facebook's announcement close to 2pm EST. It ultimately closed at 158.75. The COVID-19 pandemic has caused a tremendous economic toll across the globe, but ZM has been a major beneficiary of this new "stay-at-home" and "social distancing" era. Since December 2019, ZM has seen its users increase from 10 million to 300 million. The company has so far weathered security concerns, but now they have yet another major competitor to contend with in Facebook. There are two sides to this Facebook announcement, however. Certainly, increased competition from a major technology company could be viewed as a negative. But the other side of that conversation is that Facebook, Microsoft, Google, etc. are all confirming the validity of the business model and future by offering products in ZM's space. And if any of these technology giants truly want to grow their business rapidly in this area, why not just buy the leader - ZM?
The power of ZM's technology was on display for the world to see as the 2020 NFL Draft got underway on Thursday evening. Zoom connected NFL headquarters, teams from around the NFL, its fans and the media while broadcasting it to viewers around the world. Can you imagine a better marketing strategy than showing every sports-starved fan around the globe how well ZM's technology can bring everyone together simultaneously while remaining in the comfort of your own home? Masterful.
It was announced yesterday that ZM would be added to the NASDAQ 100 index on April 30th, but I'm not so sure that the marketing leading up to and during Thursday night's NFL Draft isn't the culprit for the latest surge in its price. After all, the majority of the recent gains occurred prior to index announcement.
Earlier this month, I appeared on StockCharts TV's "The Pitch", joining host and StockCharts.com's Chief Market Strategist David Keller along with two of my fellow StockCharts.com contributors, Grayson Roze and Mary Ellen McGonagle. We each shared 5 strategic stock picks given COVID-19 and the likely paradigm shift to follow. One of the 5 companies that I featured was ZM.
ZM is changing the world as we know it. Despite competition, they are the leader in an exciting area.
Even if the pandemic were to end tomorrow, which we know it won't, a brand new collaboration technology has been unleashed on global businesses. We can now see just how easy it is to collaborate online, whether it be with friends and family or, more importantly, for business. And Wall Street has taken notice by sending ZM shares soaring:
I've circled the massive volume that we've seen over the past couple months. I know many technicians do not use volume in their analysis, but I'd love to hear any negative thoughts anyone might have about ZM after seeing a two-month doubling of its share price on historic volume levels - all during a pandemic which has seen many stocks move to lows not seen in more than a decade. Let's face it, timing is very important in life, and ZM's online collaboration is special - and Wall Street knows it.
There were four other companies that I discussed on "The Pitch" a few weeks ago that I believe will benefit from a social distancing paradigm shift. You can check those out by CLICKING HERE. I also plan to release an expanded list of 20 stocks poised to benefit from this paradigm shift. You can learn more about this event using the above link.
Happy trading!
Tom
