Tackle Today: Zoom earnings tonight
June 2, 2020
≈ Will the stay at home darling meet expectations? ≈
Over the last few months, several companies have benefited from the Shelter in Place orders that have been imposed by governments. The ‘Stay at Home’ trade has been a common theme that has driven money into many different types of companies. DocuSign, Teledoc, Draft Kings, Wayfair, Shopify and Amazon all come to mind. But it could be debated that Zoom Video Communications (ticker: ZM) might be the one company that has caught the attention of the public more from this lockdown than any other.
In April, the company announced that it had reached 200 Million daily participants using their video conferencing software. That is 20 times more than its records from last year. The growth has been skyrocketing, and so has the stock price. The stock was already doing well before the lockdown, having risen from roughly $70 per share to $110 per share in mid-March, but it is now up over $200 per share heading into its quarterly earnings report.
This one is going to be fascinating, in the last 5 days alone, the stock has been rising aggressively before the numbers come out tonight. Will it be justified by their results? I cannot wait to see what happens here. The hype, the rally, the reasoning, all of it will be on watch tonight and tomorrow as the results come in and the market reaction plays itself out.
Many questions need to be answered, like how many of their accounts are free v. paid, has the daily users maintained it’s high water mark as economies have re-opened (and schools have closed where students haven’t needed zoom, and what are they going to do to address cyber-security concerns moving forward. Many earnings reports are boring, some are just numbers and data, this one will be more, for many traders and investors who are trying to understand if some of these Stay at Home stocks can maintain their trends.
The options market is pricing in a $25 gap risk, up or down, which is about 12% of the stock price. Trading through earnings is an advanced strategy, only used by veteran traders. The interest in Zoom isn’t based on whether there is a trade here or not, that’s a different question, but what it might signal to the rest of the market for this segment of the stock market that has benefited from the recent conditions. Get your popcorn ready, Earnings report after the market closes.
Chart of the Day
Zoom Daily Chart
Zoom has been one of the top performing large cap companies year to date. It’s run aggressively into earnings reporting tonight, after the market close.
Video of the Day
Trading Basics: Market Maker Move
A look at how to determine the MMM or the expected move for a stock on earnings.
Today’s line up
Traders Lounge 11 AM EST
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The Coaches Show 8:30 PM EST
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Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
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