Does Delta Variant Make Zoom Video Stock a Buy Again?

This post was originally published on this site

Zoom Video  (ZM) – Get Report isn’t in the headlines due to COVID-19. At least, not yet.

Instead, investors are focused on the company after it announced its $15 billion acquisition of Five9  (FIVN) – Get Report in an all-stock deal.

In prior coverage from TheStreet, both the companies and analysts said the purchase expands Zoom’s total addressable market, including individual and enterprise customers, by around $24 billion.

Shares are down 4.5% as a result, despite many considering Five9 a great company. For what it’s worth, Five9 is up about 4.5% on the day.

The flip side is that many investors are likely worried about dilution and the news comes on a day where the Dow is down about 930 points at last check, which is more likely to spur fear rather than optimism.

In any regard, with COVID-19 cases caused from the Delta variant on the rise, pandemic favorite Zoom Video should eventually fetch a bit.

Let’s look at the charts.

Trading Zoom Video Stock

Weekly chart of Zoom Video stock.

Chart courtesy of TrendSpider.com

TST Recommends

Shares recently tried to rally above $400, but couldn’t gain momentum over this mark. Last week, shares also broke below the 50-week moving average. This week, Zoom Video stock is trading below the 10-week moving average.

These are not necessarily great observations for the bulls.

However, the stock is finding its footing around the 21-week and 10-month moving averages, as well as in a prior supply/demand zone. So far this year, the $335 to $345 area has been incredibly relevant both as support and resistance.

The hope this time around is that this area, in conjunction with its 21-week and 10-month moving averages, will provide support for Zoom Video.

If it does, bulls need to see Zoom Video reclaim the 10-week moving average, then the 50-week.

If it can do that, $400 is back in play. Above that and bulls may use a longer-term target of $445.

On the downside, keep an eye on the $335 level. A close below that mark opens the stock to more downside. Specifically, $315 would be on my radar should $335 fail, followed by $300, then the 21-month moving average.

Will Zoom Video stock gain any momentum based on the Delta variant? I don’t know. But based on how it traded in 2020, a spike in cases could be good for the stock, even if it’s bad for the world.