Why Zoom (ZM) Stock is Up 9% Today

November 26, 2021 7:09 AM EST

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Shares of Zoom Video Communications (NASDAQ: ZM) are trading nearly 9% higher in today’s pre-open on fears the new South African COVID-19 variant will trigger fresh lockdowns.

In such a scenario, Zoom is expected to benefit again from the work-from-home regime that helped shares rally in 2020.

Investors will see a lot of upside potential in Zoom shares given they hit a 17-month low last week after the company reported a slowdown in growth prospects.

Zoom stock price now trades about 65% off the record highs set last year although we may witness a swift recovery in case fears over a new variant prove to be justified.

"We need to see how transmissible this variant is, is it able to evade the vaccines - this is crucial. I expect this story to drag on for a few days until scientists have a better understanding of it,” Giles Coghlan, chief currency analyst at HYCM, told Reuters.

Some countries in Europe, like Slovakia and Austria, have already announced new measures to curb the virus transmission.

"I don't think there's any going back to the pre-COVID-19 world. We're just going to get mutations through time and that's going to change the way people operate in the economy. That's just reality,” added Mark Arnold, chief investment officer at Hyperion Asset Management.

Zoom stock is down 42% YTD.

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