Why Zoom Video (ZM) Shares Fell Sharply on Tuesday but Started Rising Today

UTC by Steve Muchoki · 3 min read
Why Zoom Video (ZM) Shares Fell Sharply on Tuesday but Started Rising Today
Photo: Zoom Blog

Zoom Video Communications (ZM) shares fell 15% to hit $135.18 on March 25. Although having risen over 100% in the past year, the sudden fall is being attributed to President Trump calling on businesses to resume. Today, ZM stock is up again.

Zoom Video Communications Inc (NASDAQ: ZM) shares are among the stocks which have been defying the gravitational pull from the coronavirus pandemic. The company which offers remote conferencing services has seen an uptick in the use of its services, as more people get to opt to work remotely. With the rise in coronavirus spread, the fear is pushing people towards solitary confinements in their homes.

Zoom Video shares have been on the rise for the better part of the year and also last year. It was a huge success after going public and being enlisted by NASDAQ. With the cool features that the company offers through their app, it has become the favourite in terms of conferencing, virtual meetings and also family and friends catching up. 

Yesterday, ZM stock fell 15% to hit $135.18. It was definitely an unpleasant surprise. Today, the situation has changed. ZM shares are trading at around $140, having added $4.99 from the previous close.

A lot of investors are betting big on the shares of the company if the situation at hand remains or worsens on the ground. On a short term basis, the shares might skyrocket even further, hence making the current fall just a minor pullback as more bulls gather momentum. However, not all see the same perspective regarding the company, whereby, they are sceptical if the situation is controlled soonest and normal life resumes.

Therefore, making the pullback a reversal point, which will lead to the stocks’ having seen the all-time high for the year. However, the company has been promising the investors, an ever-rising value of their portfolios, which has been realized so far.

Reasons for Sudden Dip of Zoom Video (ZM) Shares on Tuesday

The company has been riding on more people working remotely for the past few weeks, as coronavirus began to gain more ground in the United States. Well, in a way the company is enjoying the current economic crisis, which is a sadistic way of putting it, but that is the naked truth.

More and more giant tech companies like Amazon.com Inc (NASDAQ: AMZN), Microsoft Corporation (NASDAQ: MSFT), and also Google (NASDAQ: GOOGL) have advised their employees to work remotely. As a result, a high number of people might be using the application which is a subscription-based per given time for a limited number of users.

However, the shares fell from trading at $160 down to $141 at the time of writing. The sudden fall has been attributed to some comments President Donald Trump made. He suggested that the U.S. workers should be given a chance to go back into their workplace and practice social distancing. In short, he suggested that companies should prepare to reopen and learn to control the virus while at work.

As a result, Zoom Communication shares dropped suddenly, but have since found a refuge awaiting further fundamentals to react on.

However, today, following the general market trend (yes, it has finally become more positive), ZM shares started growing and are almost 4% up at the moment.

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