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Zoom Video Communications (ZM) stock price lost $9.19 approximately 7.48% on April 8. The fall is being attributed to the class-action lawsuit. Zoom is being sued for not disclosing privacy security flaws.
Since the outbreak of coronavirus, many people got to adapt to working remotely. Zoom Video Communications Inc (NASDAQ: ZM) and its stock price have been on the rise. However, the rally did not have much of the fuel as the bulls seem to be already exhausted. It all began around March 20, when the company began battling arising issues of privacy and security flaws.
The market chart formed a strong resistance level at $160, where the stock bounced to the downward trend on a free fall. Yesterday the ZM stock price was at $113.71. Having shed $9.19 from the previous day’s high, which reciprocated to 7.48%. Today in the pre-market, Zoom (ZM) stock rose 1.78% to trade at $115.77.
On a technical point of view, the market price on the 4-hour chart is desperately sitting on a level that acted as both resistance and support, during the previous bull rally. Besides that, if the fundamentals continue going against the company, chances are that the prices will plummet even further.
Putting into perspective the company is facing stiff competition from the well- established Microsoft team.
However, despite the challenges, its stock value remains a few that have been riding on profits so far. The stock value rose from trading at around $62 to the all-time high, $160.
The company saw a supper surge in its system usage in the first quarter, whereby, the figure moved from 10 million customers to over 200 million in March. The psychology of the mass dictates that most will move towards where they feel safe. Hence a huge drop in the trust of most investors.
Zoom Video Security and Privacy Flaws that Affect ZM Stock Price
Currently, Zoom Video Communications Inc is being sued in a San Francisco federal court. According to the complainant, the company and its top executives were accused of hiding the truth about the app’s shortcomings in its software encryption.
Some of the flaws include how Zoom app would share users’ data with Facebook, however, the flaw was resolved the following day after it was highlighted. The other incidence was when reports of classroom Zoom bombing attacks started arising.
After investigators found out that Zoom does not use end-to-end encryption, most high-end customers like SpaceX banned its use among the employees.
The problems did not end there as at the beginning of April, some security researchers found out that an automated tool was able to find around 100 Zoom meeting IDs in an Hour.
In most of the cases, Zoom came out to apologize, but it seems things are starting to get out of control for the team. If the security concerns are not fixed early enough, the stock market will bleed profusely to its lowest point.