Why Zoom Stock Fell Today

What happened

Shares of Zoom Video Communications (NASDAQ: ZM) fell by as much as 5.2% today, as investors cooled to some market sectors, including tech stocks. The company's share price slide was in line with a broader market dip today, with the S&P 500 down 1.4% in afternoon trading.

Zoom's stock had regained most of the losses by the afternoon, and the company's share price was down less than 1% as of 2:50 p.m. EDT. 

So what 

Generally speaking, most tech stocks have performed particularly well over the past six months as investors have looked for technology companies that are growing during the coronavirus pandemic. Zoom's video communication service has been a bright spot for investors, as many people have used its service for work, school, and keeping in touch with friends and family. 

Two line graphs on a dark background.

Image source: Getty Images.

But over the past few weeks some investors have begun to sell off their tech investments and take their gains from the past few months. This has pushed down the share price of some technology companies, including Zoom, if only temporarily.

While Zoom's stock bounced back today, it's down from its high in early September. Still, the stock is up an astonishing 499% since the beginning of this year.

Now what 

There's likely more volatility ahead for Zoom's stock, and the rest of the market. Investors are constantly processing information about COVID-19 and the U.S. economy, which is causing a lot of short-term uncertainty in the broader market. But what Zoom investors should remember is that the company's underlying business is strong and any temporary dips Zoom's stock experiences right now is likely just the result of investors responding to news that's not directly related to the company.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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