Zoom Video Communications (NASDAQ:ZM) Falls From High On profit Taking: What to do Now?

Ever since the lockdowns went into effect in different parts of the world, hundreds of thousands of people have been working on home and using Zoom Video Communications Inc (NASDAQ:ZM) in order to conduct meetings.

The company has come into the limelight over the past weeks, and its market cap has consequently zoomed to $50 billion. The user base now stands at 300 million, and while analysts believe that Zoom will find it difficult to extract a fee for its services, the markets believe otherwise. Now, it remains to be seen if the current valuation gets Zoom the entry into the coveted S&P500.

Big News Out

This week the company was included in the NASDAQ 100 Index, and while that is a welcome development for Zoom, it should be noted that the rules for entry into that particular index are lenient. Entry into the S&P500 index will be a major boost for the Zoom stock, and it is interesting to note that it already meets many of the conditions. Its market cap is way above the minimum limit of $8.2 billion, and the stock is trading above $1 while being listed on a major United States stock exchange. Additionally, the Zoom stock completed a year of being traded on April 18 and completed another criterion.

The company is also profitable and has, in fact, posted profits in each of the last four quarters. Profitability is also a condition for listing on the S&P500. The Zoom stock is now in a position at which it could get an invitation to join the S&P500 index soon, and it could be a major boost for the stock. Investors pump in billions of dollars into the index, and the money is bound to flow into the Zoom stock. Hence, even if individual investors do not buy the stock, the index funds will keep buying the Zoom stock if it does get included in the S&P500.

About Travis Garlick 1678 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.