Zoom Communications (NASDAQ:ZM) Shares Gap Down – Here’s Why

Zoom Communications, Inc. (NASDAQ:ZM)’s stock price gapped down prior to trading on Wednesday . The stock had previously closed at $100.92, but opened at $95.20. Zoom Communications shares last traded at $94.9520, with a volume of 1,473,975 shares changing hands.

Zoom Communications News Roundup

Here are the key news stories impacting Zoom Communications this week:

• Positive Sentiment: Zoom reported fiscal second-quarter adjusted earnings of $1.55 per share, above the roughly $1.48-$1.50 analyst consensus, while revenue rose 4.9% year over year to $1.28 billion, also exceeding expectations. Zoom Communications earnings report
• Positive Sentiment: Management raised fiscal 2027 adjusted EPS guidance to $6.08-$6.12, above the approximately $5.71 consensus, while maintaining revenue expectations near $5.1 billion. Enterprise revenue, AI-related deals and record contact-center bookings were highlighted as growth drivers. Zoom Communications fiscal second-quarter results
• Positive Sentiment: Needham reaffirmed its Buy rating and maintained a $130 price target, implying substantial upside from recent trading levels. BTIG also reaffirmed its Buy rating. Analyst rating updates
• Neutral Sentiment: Analyst opinion remains mixed: Citizens JMP reiterated Market Perform, KeyCorp maintained Sector Weight, and Cantor Fitzgerald assigned a Neutral rating, suggesting limited near-term conviction despite the long-term growth opportunity. Zoom analyst reactions
• Negative Sentiment: Zoom’s fiscal third-quarter profit outlook came in slightly below Wall Street expectations, triggering concern that competition and investment in AI features may pressure margins. Revenue guidance was broadly in line, making the profit shortfall the key market focus. Zoom forecasts quarterly profit below estimates
• Negative Sentiment: Investors also remain concerned about slower online-business growth and customer churn. Those risks make Zoom’s enterprise and AI expansion important, but they have not yet offset concerns about a relatively modest overall revenue-growth rate. Zoom stock retreats as guidance underwhelms

Wall Street Analysts Forecast Growth

Several research analysts have commented on ZM shares. Rosenblatt Securities restated a “buy” rating and issued a $130.00 target price on shares of Zoom Communications in a research report on Friday, August 21st. HSBC boosted their price objective on Zoom Communications from $107.00 to $133.00 and gave the stock a “buy” rating in a research report on Tuesday, June 2nd. Needham & Company LLC reissued a “buy” rating and issued a $130.00 price objective on shares of Zoom Communications in a report on Wednesday. BTIG Research restated a “buy” rating and issued a $125.00 target price on shares of Zoom Communications in a research report on Monday. Finally, Royal Bank Of Canada reaffirmed an “outperform” rating and set a $130.00 target price on shares of Zoom Communications in a research note on Wednesday. Sixteen research analysts have rated the stock with a Buy rating and twelve have given a Hold rating to the stock. According to MarketBeat, the company has an average rating of “Moderate Buy” and a consensus target price of $112.55.

Zoom Communications Stock Performance

The stock has a market cap of $27.57 billion, a price-to-earnings ratio of 13.81, a PEG ratio of 5.53 and a beta of 1.00. The company’s 50 day simple moving average is $94.00 and its 200 day simple moving average is $91.30.

Zoom Communications (NASDAQ:ZM) last released its quarterly earnings results on Tuesday, August 25th. The company reported $1.55 EPS for the quarter, topping analysts’ consensus estimates of $1.48 by $0.07. The company had revenue of $1.28 billion for the quarter, compared to the consensus estimate of $1.27 billion. Zoom Communications had a net margin of 41.99% and a return on equity of 11.87%. Zoom Communications’s revenue was up 4.9% on a year-over-year basis. During the same period in the previous year, the firm earned $1.53 EPS. Zoom Communications has set its FY 2027 guidance at 6.080-6.120 EPS and its Q3 2027 guidance at 1.460-1.480 EPS. Sell-side analysts predict that Zoom Communications, Inc. will post 4.21 EPS for the current year.

Insider Transactions at Zoom Communications

In other news, CFO Michelle Chang sold 8,489 shares of Zoom Communications stock in a transaction on Friday, July 10th. The stock was sold at an average price of $90.80, for a total transaction of $770,801.20. Following the transaction, the chief financial officer directly owned 35,452 shares in the company, valued at approximately $3,219,041.60. This trade represents a 19.32% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Eric S. Yuan sold 12,100 shares of the business’s stock in a transaction on Wednesday, August 5th. The stock was sold at an average price of $100.17, for a total value of $1,212,057.00. Following the completion of the sale, the chief executive officer directly owned 22,998 shares in the company, valued at $2,303,709.66. This represents a 34.47% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 56,155 shares of company stock worth $5,654,761 in the last three months. 8.83% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

Large investors have recently bought and sold shares of the company. Kestra Advisory Services LLC increased its holdings in shares of Zoom Communications by 2.0% during the fourth quarter. Kestra Advisory Services LLC now owns 5,928 shares of the company’s stock worth $512,000 after buying an additional 116 shares in the last quarter. 3Chopt Investment Partners LLC lifted its stake in shares of Zoom Communications by 1.6% in the 1st quarter. 3Chopt Investment Partners LLC now owns 7,370 shares of the company’s stock valued at $592,000 after acquiring an additional 119 shares during the last quarter. Rexford Capital Inc. boosted its holdings in shares of Zoom Communications by 45.7% during the 1st quarter. Rexford Capital Inc. now owns 389 shares of the company’s stock valued at $31,000 after acquiring an additional 122 shares in the last quarter. New York State Teachers Retirement System boosted its holdings in shares of Zoom Communications by 0.5% during the 4th quarter. New York State Teachers Retirement System now owns 24,263 shares of the company’s stock valued at $2,094,000 after acquiring an additional 123 shares in the last quarter. Finally, Root Financial Partners LLC grew its position in Zoom Communications by 33.5% during the 4th quarter. Root Financial Partners LLC now owns 542 shares of the company’s stock worth $47,000 after acquiring an additional 136 shares during the last quarter. Institutional investors own 66.54% of the company’s stock.

Zoom Communications Company Profile

Zoom Video Communications, Inc (commonly referred to as Zoom) is a provider of cloud-based communications and collaboration solutions. The company’s platform supports video conferencing, voice calling, instant messaging, webinars and large-scale virtual events, and meeting room systems, marketed to businesses, educational institutions, government organizations and individual users. Zoom’s product lineup includes Zoom Meetings, Zoom Phone, Zoom Rooms, Zoom Video Webinars and Zoom Chat, and the company offers integrations and extensions through a developer marketplace and third-party apps.

Founded in 2011 by Eric S.