Strong Debut Earnings Sends Zoom Video Stock to Record High

Options traders have bought the June 90 call in recent weeks

Jun 7, 2019 at 10:00 AM
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Zoom Video Communications Inc (NASDAQ:ZM) stock has shot up 19.4% to trade at $94.82, and earlier nabbed a record high of $98.89, after the remote conferencing services specialist took its first turn in the earnings confessional as a publicly traded company. For the first quarter, ZM recorded a surprise profit of 3 cents per share, while revenue more than doubled year-over-year to a stronger-than-anticipated $122 million. Zoom Video also gave better-than-expected current-quarter and full-year guidance.

No fewer than three price-target hikes have come down the pike, including one to $90 from $80 at Credit Suisse. Plus, Morgan Stanley said Zoom Phone traction and an increasing customer base create a strong growth pipeline for the company, while Rosenblatt Securities commented on Zoom Video's "highly differentiated and disruptive product."

Analysts have been skeptical of the stock that's been red-hot since its mid-April debut. Options traders, on the other hand, have taken a bullish stance toward the security, buying to open 1.43 calls for each put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) over the last 10 days. Data shows the June 90 call saw the biggest increase in open interest over this time frame, and most of the action was at the hands of buyers.

On the charts, Zoom Video Communications stock opened for trading at $65 on April 18, well above the company's initial public offering (IPO) price of $36. The equity topped out at a previous high of $91.46 on May 20, before pulling back to test support at its recently formed 30-day moving average. Thanks to today's pop, the shares are on track for back-to-back weekly wins.


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