Barron's on WFH stocks: Upper Limit Reached?

I am long ZM (it’s also my largest position. Thank you, Saul, for the encouragement to buy a stock on the way up!). I did find it curious that ZM shares fell this week, so did this writer. I’m putting this out here for comments.

“The earnings report sent Zoom shares up 7.6% on Wednesday, but the stock gave it all back plus more by the end of the week. And that has to be a little worrisome for Zoom bulls. Zoom doubled its revenue outlook, thus cutting its price-to-sales multiple in half, and the stock barely budged. That response suggests we’re reached the upper limits of the remarkable rally in work-from-home stocks.”

The article goes on to mention DDOG, COUP, TEAM, WORK, DOCU…

(I was able to access it without a subscription…hope others can, too).

https://www.barrons.com/articles/zoom-video-earnings-contain…

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“The earnings report sent Zoom shares up 7.6% on Wednesday, but the stock gave it all back plus more by the end of the week. And that has to be a little worrisome for Zoom bulls. Zoom doubled its revenue outlook, thus cutting its price-to-sales multiple in half, and the stock barely budged. That response suggests we’re reached the upper limits of the remarkable rally in work-from-home stocks.”

Saul does not want TA here but the highlighted bit is a lot of nonsense. No seasoned investor believes that the market is a smooth escalator to financial heaven. Does this chart suggest the end of the world or just some profit taking after a huge rise? How many here have talked about “taking some off the top?”

https://softwaretimes.com/pics/zm-06-05-2020.gif

Denny Schlesinger

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I did find it curious that ZM shares fell this week.

Zoom shares ROSE this week from $179.50 the previous Friday to $207.60 this Friday. That’s over $28 in a week. And over 15%. And it was up over $45 from $162 just eight trading days ago. That’s up more than a quarter of its value in a week and a half of trading, in anticipation of these results. Sorry that that wasn’t enough for you, and the idiot who wrote that for Barrons.

Look, you can’t worry about every little movement, or lack of it, in a stock. It will drive you crazy. Look at what the company is doing instead.

Saul

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If you want to learn how to NOT invest then read Barron’s. I read them for years and after realizing I never got one idea out of them I stopped.

They are constantly writing about how some stock with low price multiples can rally 20%.

Plus their stock picks are lucky if they beat the S&P 500.

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