Will Zoom Communications Stock Fall On Upcoming Earnings?

Zoom Communications (NASDAQ:ZM) is scheduled to release its earnings on Wednesday, May 21, 2025. An analysis of the past five years reveals that Zoom’s stock has experienced a negative one-day return following its earnings announcements in 68% of instances. These negative returns have had a median of -8.1% and a maximum of -16.7%.

For event-driven traders, these historical patterns can offer valuable insights, although the actual market reaction will largely depend on how the reported results compare to consensus estimates and market expectations. There are two primary strategies to potentially capitalize on this historical data:

• Pre-Earnings Strategy: Understand the historical probabilities of positive or negative reactions and establish a position before the earnings release.
• Post-Earnings Strategy: Analyze the correlation between the immediate market response to the earnings and the subsequent medium-term stock performance, and then position your trades accordingly after the announcement.

Currently, consensus estimates predict Zoom to report earnings per share of $1.31 on revenues of $1.17 billion for the upcoming quarter. This compares to the same quarter last year, where Zoom reported earnings per share of $1.35 on revenues of $1.14 billion.

From a fundamental standpoint, Zoom currently has a market capitalization of $26 billion. Over the trailing twelve months, the company generated $4.7 billion in revenue, achieving an operating profit of $813 million and a net income of $1.0 billion. Also, see Buy or Sell Zoom Stock

That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Zoom Communications’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 19 earnings data points recorded over the last five years, with 6 positive and 13 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 32% of the time.
• Notably, this percentage increases to 36% if we consider data for the last 3 years instead of 5.
• Median of the 6 positive returns = 7.8%, and median of the 13 negative returns = -8.1%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

ZM 1D, 5D, and 21D Post Earnings Return

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

ZM Correlation Between 1D, 5D and 21D Historical Returns

Is There Any Correlation With Peer Earnings?

Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Zoom Communications stock compared with the stock performance of peers that reported earnings just before Zoom Communications. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

ZM Correlation With Peer Earnings

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