Markets Stay Optimistic, Zoom (ZM) & Crowdstrike (CRWD) Beat Ests
Stock market indexes continue to shrug off tension and turmoil, leading ever-closer back toward the all-time highs we saw back in February of this year, prior to the coronavirus lockdown which purposely shut the U.S. economy for roughly 10 weeks. Even sinking new auto sales for May couldn’t dampen the mood, as results overall in the industry showed bigger gains than expected, to 12.17 million units sold in the quarter.
All 11 major sectors closed higher today — though likely more a function of a lack of fresh news items or economic reads to absorb. The Dow wound up finishing +267 points today, with the Nasdaq +56 and the S&P 500 +25. A reopening economy and agreeable weather in many parts of the country are helping give a boost to animal spirits in the market.
Speaking of market exuberance, the veritable lottery winner of the coronavirus era, Zoom Video ZM, blew the doors off expectations for its fiscal Q1 earnings report after the bell Tuesday. Earnings of 20 cents per share doubled the 10 cents per share in the Zacks consensus, and rose 667% from earnings posted in the year-ago quarter. Revenues also whalloped estimates, with $328.2 million well-outpacing the $203 million analysts were looking for.
Guidance for next quarter, quite simply, went into another orbit: a range of 44-46 cents per share is now expected for Q2, 4x times higher that previously anticipated, on $495-500 million is quarterly sales that more than doubled the early projection of $222 million for Q2. Growth in customers with 10+ employees raced ahead 350% year over year, with its highest-paying customers up 90% from the year-ago quarter.
Clearly, Zoom does not expect the “work from home” environment to dry up anytime soon. Zoom shares have already gone up more than 200% year-to-date, and have tacked on another 4% in late-trading following the earnings results. Prior to the release, ZM had a Zacks Rank #3 (Hold) with a Value-Growth-Momentum score of D.
Silicon Valley-based Crowdstrike CRWD, a cybersecurity tech company, joined in with good news after regular trading Tuesday, swinging to positive $0.02 earnings (-$0.06 per share was expected) on $178.1 million in the quarter (up from the $165.9 million analysts were looking for). Subscriber growth came in 77%, better than the 72% posted a year ago. Guidance for next quarter also improves from Zacks consensus estimates: -$0.02 to $0.00 per share on $185.8 - 190.3 million. Shares have jumped over 6% upon the report.
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