Zoom Video stock price has held steady in the past few years as its growth trajectory waned after the COVID-19 boom.
ZM was trading at $90, inside a range it has remained at in the past few years.
It remains 70% above its lowest level in 2024 as focus shifts to the upcoming earnings, which will provide more color about its business trajectory.
Zoom Video to publish its earnings this week
The ZM stock price has moved sideways in the past few years as it moved from a fast-growing technology company into a slow-growing value one.
Its revenue growth has slowed in the past few years, a trend that may continue in the foreseeable future.
The most recent results showed that its quarterly revenue rose by 4.4% in the third quarter to $1.2 billion.
This growth is a sign that companies continue to leverage its platform despite the elevated competition from other companies like Google and Microsoft.
Indeed, the report suggests that the up-market clients continued thriving during the quarter. The number of customers contributing over $100,000 in annual revenue jumped to 4,360.
Zoom Communications is now focusing on profitability, which it is achieving by cutting costs.
It slashed its R&D, S&M, and G&A expenses by over 185 basis points. As a result, its operating income margin jumped by 971 basis points to 25.2%.
The company has also continued to return cash to shareholders using its strong freefall cash flow and cash in the balance sheet.
It ended the last quarter with nearly $8 billion in cash in its balance sheet.
As a result, it repurchased 5.3 million shares in the third quarter, bringing the yearly buying to 32.5 million.
As a result, its outstanding shares have continued falling in the past few years, a move intended to boost its earnings-per-share.
The next main catalyst for the Zoom stock price is its upcoming financial results, which will come out on Tuesday.
In its last results, the management boosted the revenue target to between $1.230 billion and $1.235 billion, while its operating income was between $477 million and $483 million.
Wall Street analysts believe that the upcoming results will show that its revenue rose by 4%, bringing the annual revenue to over $4.86 billion, up by 4.20% YoY.
Most analysts have a muted outlook for the Zoom stock price. While UBS upgraded the stock to buy, those at Piper Sandler, Jefferies, and Wells Fargo maintained a neutral outlook.
Zoom stock technical analysis
ZM stock chart | Source: TradingView
The weekly chart shows that the Zoom stock price has remained in a tight range in the past few years.
It has remained inside the key support and resistance levels at $58 and $92 since August 2022.
This consolidation could be a sign that it is in an accumulation phase of the Wyckoff Theory.
This pattern is normally followed by markup, where demand often rises.
A good example of this is the Zcash price surge, which happened in the fourth quarter of last year.
If this happens, the stock may soar to the 23.6% Fibonacci Retracement level at $183, up by 100% from the current level.
However, a drop below the lower side of the channel will invalidate the bullish forecast.
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