The move comes after the company reported earnings after the close on Monday.
The report resulted in a number of lowered price targets, but notably, many remain well above the stock's current price.
In fact, Zoom also provided better-than-expected revenue guidance for next quarter and the full-year, as well as better-than-expected earnings guidance for the fourth quarter and the full year.
Coming into the report, bulls were hoping that enough was enough as shares were down more than 58% from the highs.
Many likely feel this action is unfair and unwarranted. But they have to remember, there is an ongoing bear market in high-growth stocks, quality or not.
Advanced Micro Devices (AMD) - Get Free Report, Nvidia (NVDA) - Get Free Report, Tesla (TSLA) - Get Free Report and a handful of others seem to be the only growth names that can catch a bid. The rest seem to be down 30% to 40% or more — even the high-quality ones.
Now what can Zoom do about it?
Trading Zoom Video Stock
If we zoom out to a weekly chart, the downward action becomes a bit less sloppy and a bit more organized.
Specifically, I am looking at an “ABC” correction in Zoom Video stock, which has played out since the stock topped in October 2020.
The first wave — leg “A” — ended at $273.20, with Zoom bottoming with the rest of growth stocks in early May.
The stock rallied up to the $400 from there, but couldn’t push through this area, which was sealed as resistance.
Making new lows ahead of earnings while trading lower after the print has Zoom Video stock looking for new lows below $200.
If bulls are lucky, that low will come between $190 and $200. That’s the 161.8% downside extension from the “B” leg down to the “A” leg.
I know that may sound like I’m grasping at straws and I’d be lying if I called Zoom Video a top-tier, A+ setup at the moment.
The truth is, shares are plunging into the void of no man’s land with seemingly no support nearby. At least within a few bucks of the current price, there’s a chance the stock finds its footing in this area and gives bulls a low to trade against.
On a bounce, I’d love to see Zoom get back to the $230 to $240 area.