Zoom Video share price forecast after Q2 results

Zoom Video Communications, Inc. (NASDAQ: ZM) reported second-quarter results last Monday, and the company’s management updated financial guidance for the third fiscal quarter and for the full 2023 fiscal year.

Second-quarter results missed estimates, and Citigroup analyst Tyler Radke said that the quarterly results showed many of the concerns that drove the firm’s recent downgrade.

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Second quarter results showed many of the concerns that drove the firm’s recent downgrade

Zoom Video is an American communications technology company that provides video telephony and online chat services through a cloud-based peer-to-peer software platform. The company was incorporated in 2011 and completed an initial public offering in 2019.

Zoom Video reported second-quarter results last Monday; total revenue has increased by 7.8% Y/Y to $1.1 billion, which was less than expected, while the non-GAAP earnings per share were $1.05 (beats by $0.12).

JMP Securities analyst Patrick Walravens, who had a market perform rating on Zoom Video, said that overall revenue results are getting worse, as online sales fell 9% year-over-year, worse than the 2% decline seen last quarter.

Zoom Video shares plunged nearly 15% on Tuesday after the company reported second-quarter results, and Citigroup analyst Tyler Radke said that the quarterly results showed many of the concerns that drove the firm’s recent downgrade.

BTIG analyst Matt VanVliet downgraded Zoom to neutral from buy following the results, and it is also important to mention that hedge fund Tiger Global Management recently disclosed that it exited its stake in Zoom. Matt VanVliet added:

Zoom Video is likely to keep facing continued macro headwinds, including its online business and continued pressure in the EMEA region.

The company’s management updated financial guidance for the third fiscal quarter and for the full 2023 fiscal year. Total revenue for the third fiscal quarter should be between $1.095 billion and $1.10 billion vs. a consensus of $1.15 billion, while the non-GAAP income from operations should be between $325 million and $330 million.

Total revenue for the full fiscal year should be between $4.38 billion and $4.39 billion vs. a consensus of $4.53 billion, while the non-GAAP income from operations should be between $1.44 billion and $1.45 billion.

According to Citigroup analyst Tyler Radke, the updated financial guidance for the third fiscal quarter and for the full 2023 fiscal year is much worse than he feared.

$80 represents the current support level

The current support level stands at $80, while $100 represents the first resistance level. If the price falls below $80, it would be a “sell” signal, and we have the open way to $75 or even below.

On the other side, if the price jumps above $100, the next target could be $110.

Summary

Zoom Video reported weaker than expected second-quarter results and lowered the revenue outlook for the 2023 fiscal year. Citigroup analyst Tyler Radke said that the quarterly results showed many of the concerns that drove the firm’s recent downgrade, and probably it is not the best moment for buying shares of this company.

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