What Is the Market Sentiment on ZM?

By Kim Brooks • Wednesday, June 21 12:49 • Permanent Link

Tumbling to a price of $67.54 during today's afternoon trading session, shares of Zoom Video Communications are now -19.14% below their average target price of $83.53. Does this mean the stock will reverse course? Analysts are giving ZM an average rating of hold and target prices ranging from 65.0 to 105.0 dollars per share.

Zoom Video Communications's short interest can give us an idea of what future price movements the market expects from the stock. The short interest is the percentage of shares that are tied up in short positions, which will provide gains to the investor only if the stock price falls. The stock's short interest is 6.6% which seems to indicate a mixed sentiment on ZOOM VIDEO COMMUNICATIONS

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Zoom Video Communications, institutional investors own 66.3% of the shares, which indicates they have a very high stake in the company. What does this really tell us?

Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in ZM, it probably means they believe it is a solid investment choice.

But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.

To sum up, Zoom Video Communications is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a hold rating, an average amount of shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.

Here's a snapshot of some important facts to keep in mind about ZM:

The stock has trailing 12 month earnings per share (EPS) of $0.02
Zoom Video Communications has a trailing 12 month Price to Earnings (P/E) ratio of 3377.0 compared to the S&P 500 average of 15.97
The company has a Price to Book (P/B) ratio of 3.08 in contrast to the S&P 500's average ratio of 2.95
Zoom Video Communications is a Technology company, and the sector average P/E and P/B ratios are 27.16 and 6.23 respectively

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.