During Wednesday night's Mad Money program, Jim Cramer presented his thoughts on Zoom Video Communications (ZM) . What should investors make of the meteoric rise of ZM? The company reported on Wednesday earnings of 44 cents a share when analysts were expecting just 11 cents. Zoom saw revenue explode higher by 169% and the company beat its own guidance by 64%.
(For more on ZM, see Jim Cramer: Zoom Video's Time Has Come)
Almost overnight, Zoom became an integral part of our world, Cramer explained. Even the company didn't expect such a dramatic transition from enterprise use to consumers using their platform to keep in touch with family and friends. Couples are even holding their weddings over Zoom. That's how the company grew from 20 million users to over 300 million users this quarter.
Are shares of Zoom done going higher after soaring 229%? Cramer said this stock still has plenty of room to run as this new way of communicating is here to stay.
We wrote about ZM on Monday of this week, where we wrote that, "The last time we wrote about ZM was back on April 7 as it was experiencing a selloff. The shares found buying interest at the 50-day moving average line and our stop suggestion was not reached. Traders who are long ZM should raise stop protection to a close below $150 -- the recent low. If earnings Tuesday propel prices higher, $200 (as a round number) and $238 are our next price targets."
Let's check the latest charts and indicators now that ZM passed our $200 price target and is well on its way to our $238 price objective.
In this daily bar chart of ZM, below, we can see the vertical climb higher the past five months. Prices are still well above the rising 50-day moving average line and the bullish 200-day moving average line.
Trading volume has been heavy and the On-Balance-Volume (OBV) line has moved up with prices to a new high. Buyers of ZM have been very aggressive.
The Moving Average Convergence Divergence (MACD) oscillator has been bullish since January.
In this second daily chart of ZM, below, we used Japanese candlesticks and included the 12-day price momentum study. Here the candles do not show any sign of weakness but the 12-day price momentum study is showing equal highs from April to June, and that is a bearish divergence when compared to the price action which shows higher highs.
Divergences are not precise when it comes to signals and can be ignored by the price action. Basically a divergence is a heads up that something is going on and you should look closer.
In this weekly Japanese candlestick chart of ZM, below, everything is still bullish. No upper shadow to show rejection of the highs. A bullish OBV line and strong volume.
In this updated daily Point and Figure chart of ZM, below, we can now see a potential price target of $369.
Bottom line strategy: The charts of ZM are still bullish. Traders should remain long but raise stop protection to a close below $180 from below $150. The round number of $300 will be our price target after $238.