Is Zoom Stock Still a Good Buy in November 2020?

The debate over whether Zoom stock is still a good buy has been a hot topic in recent months. This article aims to provide an in-depth analysis of the current state of Zoom stock and whether it is recommended for investment.

Fundamental Analysis and Recent Developments

Earlier, I had recommended a short-term BUY in Zoom stock for a target of $500 above $430. However, the company has recently suggested that margins might be under pressure, leading to a slight pullback. The stock is now trading around $413, and the short-term BUY target has been adjusted to around $470. Therefore, it is advised to buy above $470 for short-term gains only.

Considerations During Lockdowns and the Future Outlook

During the lockdowns, Zoom saw a significant surge in demand due to its video conferencing capabilities. This had led to the price running up to seemingly unsustainable levels. However, with the rollout of vaccines and people becoming fatigued with lockdowns, the confidence in Zoom's growth is expected to wane. This could negatively impact the stock's performance.

Evaluation of Current Valuation and Market Trends

Despite the recent correction, Zoom remains a top-performing stock on the NASDAQ, with gains of up to 130% this year. This impressive performance is due to its essential role during the pandemic. However, it is important to consider that as the pandemic subsides and more people return to their jobs, the demand for online meetings via Zoom is likely to decrease. This could lead to a decline in the stock price.

Technical Analysis and Investment Advice

While fundamental analysis alone may not support investment in Zoom stock, technical analysis suggests a different story. It appears that the stock has broken through resistance, indicating a potential bullish trend. For those looking to open a position, it might be advisable to wait for a pullback. However, it is crucial to note that if you own this stock at $111 or $204, any advice to buy would be self-serving.

Conclusion: A Tentative Buy or Avoid?

Considering the current market conditions and the future outlook, it is not advisable to invest in Zoom stock based on fundamental analysis alone. While the stock has shown impressive growth during the pandemic, it is unlikely to maintain such rapid revenue growth in the next 2-4 years. Therefore, it is recommended to stay cautious or consider alternative investments that show more promise in the current market climate.