It’s funny how fickle investors can be. It seemed like just yesterday that Zoom Video Communications (NASDAQ:ZM) was a darling of the market. Yet, in early 2021, folks are distracted, and most people aren’t talking about ZM stock anymore.
That’s a real shame, as there’s nothing really wrong with the company. But maybe it’s not such a shame after all, since, now that the hype phase is over, those looking to buy ZM stock can get in at a more favorable price.
I hesitate to call early 2021 “post-pandemic,” since the Covid-19 crisis is ongoing. Yet informed investors must consider whether Zoom can continue to thrive as multiple drug makers work diligently to distribute vaccines to the public.
So there are a number of factors to consider. The price of ZM stock has come down, but its original catalyst might diminish over time. Pardon the pun, but let’s see if we can zoom in on this still-relevant company and attempt to form a conclusion about whether its shares are worth buying today.
A Closer Look at ZM Stock
Without a doubt, 2020 is a year that the long-term holders of ZM stock won’t soon forget. It might be difficult to imagine this now, but Zoom’s share price started that year below $70.
At that time, there didn’t seem to be any particular reason for ZM stock to double or triple in a matter of months. Yet that’s precisely what happened.
In a bull run that could best be described as relentless, ZM stock climbed steadily towards its 52-week high which it reached in October. To be more specific, ZM topped out at a mind-blowing $588.84 on Oct. 19.
The problem with manic run-ups is that they don’t last forever. Those who chased ZM stock at or near its peak found that out the hard way; yesterday, the shares closed at $380.47.
A Battleground Stock
So ZM stock is in an interesting situation. I wouldn’t exactly call it cheap, but at least its share price has come down to a more attractive level.
For a full assessment, though, we have to look beyond the technical aspects of ZM stock. Ultimately, those considering buying the stock must weigh the recent surge of Covid-19 cases against positive vaccine-related news.
I really like the way Baird analyst William Power frames the debate over ZM stock as a tug-of-war between the excitement of the past and the hope for a better future:
“Zoom has become a battleground stock following strong 2020 performance and questions on return-to-normal impacts.”
Given the drop in the share price, I suspect that forward-looking ZM stock traders have already factored in the fact that, happily for society, Covid-19 won’t keep people stuck indoors forever.
In other words, if ZM stock is indeed a battleground, then that battle has already been fought. Now it’s time to consider Zoom’s value going forward.
As I see it, the company still has plenty of value, and Zoom will still remain relevant even as vaccines are rolled out.
I know this from personal experience. Just a couple of years ago, I was using Skype practically every day to communicate with people. Back then, Skype was assumed to be the gold standard of video-conferencing software.
That’s simply not the case anymore. Lately I’ve been using Zoom as much as Skype, if not more, since the folks I chat with often tend to prefer it.
Besides, there’s more to Zoom than chatting with friends, family members and business contacts. Zoom’s platform should also remain relevant as a tool for distance learning as well as telemedicine.
The Bottom Line
I’ll admit that I was concerned about ZM stock flying too high last year. Today it’s at a lower price point, making it more attractive.
As for Zoom fading from the public’s consciousness, I wouldn’t worry about that. The platform should remain relevant for a long time, even in the face of a vaccine rollout and a freer, more relaxed public.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.