Zoom: Here Today, Gone Tomorrow?
Zoom is the definition of a hot stock. It’s the talk of the town having doubled since coronavirus broke out. The question facing investors is how long will the good times last?
The app reported $23 million in operating profit this week, boosting its market capitalization further. Zoom is valued the same as Airbus, Adidas, and Gazprom, so one way to look at this; can the app bring enough of a fight to Microsoft and Facebook to be worth the same as one-fifth of the world’s natural gas reserves (Gazprom’s valuation)?
The Invstr community thinks it can with almost a trillion dollars tied up in Zoom. We’re 90% long, 10% short-sold, with 61% of closed trades having been profitable. However, Kieran Tew from the community did his due diligence and unearthed some insider selling.
It’s never a good sign when the CEO of a new tech stock cashes out after a record quarter, especially when his firm is worth more two times the value of Beyond Meat and Ford combined.“If that doesn’t raise some red flags, then I don’t know what does,” said Tew.
The consensus among bears is wisely not to time a fall. It’s generally not a good idea to short topical growth names because their momentum can squeeze you out. If a stock keeps making all-time-highs, think about it; every short in that trade is losing money!
It took no time for the bulls in our ranks to counter, though. Great. We owe a debt of gratitude to Zoom for allowing people to stay connected during lockdown, and NoraLee Derhalli from the Invstr Team sees a “new normal” emerging. We’ve learned how to be “more efficient” in work and play without unnecessary travel. “This trend is here to stay!”
Zoom has proven itself over the past three months. It’s now about Eric Yuan supporting that stock price long-term with a runway of prospects toward permanent profitability. In the short-term, Zoom might trade on concerns about whether he’s up to the task!