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Cathie Wood's Ark Invest made headlines by offloading 161,836 shares of Zoom Video Communications Inc. (NASDAQ:ZM) just ahead of the company’s second quarter earnings report.
The sale, valued at approximately $9.1 million, signals a potential red flag for the video-conferencing giant, which has seen its stock price dip nearly 14% year-to-date.
Zoom is set to report its second-quarter earnings on Aug. 21, with Wall Street expecting $1.21 in EPS and $1.1 billion in revenue. Despite the pressure from competitors like Microsoft Corp (NASDAQ:MSFT) and Google’s parent Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Zoom has a track record of outperforming analyst expectations, having done so for seven consecutive quarters.
Investors are eager to see if the company can continue this streak and revive its stock price, which is hovering near its 52-week low of $55.06.
From a technical standpoint, Zoom is dancing on the edge. The stock is trading above its five-, 20- and 50-day exponential moving averages, indicating short-term bullish momentum.
However, the price remains below the 200-day SMA, suggesting a longer-term bearish outlook. With the stock trading around $60, it's caught between optimism and caution, as the looming earnings report could tip the scales in either direction.
On Reddit, investors are split on Zoom's potential. Some argue that the stock is undervalued, pointing to its strong free cash flow and reduced costs following layoffs.
Others remain skeptical, citing stiff competition and a price-to-earnings ratio that doesn't scream deep value.
A few even speculate that Zoom could be a takeover target for tech giants like Google or Amazon.com Inc (NASDAQ:AMZN).
As Zoom prepares to unveil its latest earnings, the stock remains at a crossroads. Will strong financials and technical signals push it higher, or will Cathie Wood's exit and competitive pressures weigh it down? Investors should brace for a volatile ride.
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