Market Movers: A Well-Needed Boom for Zoom

Market Movers: A Well-Needed Boom for Zoom

Happy Saturday folks.

We’re finally coming close to the end of another earnings season, with a few more companies on our shortlist posting results in the past week.

In fact, earnings results make up the bulk of our movers this week, with — shock, horror — some companies even seeing a boost in share price after earnings.

Did they not get the memo?

Oh well, we’ll take the good news when we get it. Let’s take a look at our winners and losers:

Moving Up ⬆️

Zoom Communications (ZM) +19.2%

Nordstrom (JWN) +17.2%

Baozun (BZUN) +15.5%

Costco (COST) +11.7%

Texas Roadhouse (TXRH) +11.0%

Moving Down ⬇️

Nautilus (NLS) -18.7%

2U (TWOU) -18.3%

Pinterest (PINS) -14.7%

The Trade Desk (TTD) -6.9%

Zillow (Z) -6.1%

The Winners:

Zoom Communications (ZM) +19.2%

It was a welcome and well-overdue return to form for Zoom, surprising investors this week by beating expectations and forecasting strong growth for the year ahead.

Reporting after the bell on Monday, management reported revenue of $1.07 billion, which matched expectations, while earnings of $1.03 per share blew past predictions. CEO Eric Yuan cited the company’s success in its Enterprise, Zoom Rooms, and Zoom Phones categories as the reason for such a strong performance, with Enterprise customers up 24% compared to the year previous.

It’s rare to see optimistic forecasts at the moment, but Zoom is confident that it will continue to see growth in its Enterprise segment, as well as get an extra boost from new products like its Whiteboard and Contact Center. In fact, the company’s CFO, Kelly Steckelberg, said that she sees acquisition being a big part of Zoom’s strategy in the coming year, with the purchase of Solvvy — an AI customer service and support platform — being closed just last week.

Granted, Zoom stock is still well off its all-time highs, but it’s good to see that the company has a strategy for its next phase of growth.

Nordstrom (JWN) +17.2%

Another beaten-down company that’s back from the dead, Nordstrom stock spiked this week after it also beat analyst expectations and raised forecasts.

Bucking the trends that we’re currently seeing across the wider retail industry, the department store chain posted a loss per share of $0.06 versus an anticipated $0.05, but beat revenue predictions comfortably by posting sales of $3.57 billion. Nordstrom also raised its revenue outlook for the rest of the fiscal year, now expecting sales of between 6% and 8% — up from a previous range of 5% to 7%.

Management said the momentum experienced during the quarter was due to in-person occasions coming back after lockdown, with services like styling and alterations proving popular and digital sales actually remaining flat.

Contrary to other retailers that benefited from initial pandemic re-openings last year, it took Nordstrom a bit longer to find its footing. With this proven focus on in-store experiences seeming to work for the company, let’s hope we don’t see any more lockdowns.

Baozun (BZUN) +15.5%

Chinese e-commerce services provider Baozun saw its shares skyrocket this week following a better-than-expected performance in its first-quarter earnings report. Adjusted earnings met expectations, but revenue came in at $313 million against an anticipated $283.8 million, while gross merchandise volume (GMV) also grew by 28.4%.

While these numbers alone may not be cause for such a significant stock boost, a strong earnings call from another Chinese e-commerce company, Alibaba, could have had an effect, with Baozun having the majority of its sales occur on Alibaba’s Tmall.

It also should be noted that Baozun reported these figures while many parts of China — its primary market — are in the midst of a series of crippling lockdowns. Investors are surely thinking that if Baozun has managed to perform this well under such tough conditions, much of the worst may have passed.

The Losers:

The Trade Desk (TTD) -6.9%

Nope, The Trade Desk didn’t report on bad earnings this week. In fact, it was all Snap’s fault!

Earlier this week, Snap shares cratered as much as 45% after the social media company warned that the revenue outlook it gave in April had already worsened due to a rapidly deteriorating macro-environment, with CEO Evan Spiegel admitting that the company was unlikely to hit the 20% to 25% revenue growth that he had expected just a few weeks ago.

This sent shockwaves through the wider digital advertising industry, with the likes of Meta, Twitter, Pinterest, and — of course — The Trade Desk all falling heavily in sympathy.

However, management at The Trade Desk was quick to react, filing a note with the SEC later in the week that reaffirms the revenue guidance it gave in its own earnings report a few weeks ago.

It’s a tough time for digital advertising out there, but The Trade Desk seems well-placed to capitalize on newly-emerging trends in the industry. Check out our recent Stock of the Month report to find out more about that.

Zillow (Z) -6.1%

There’s quite a lot going on in the wider economic environment, as I’m sure you know, but one thing that’s affecting Zillow specifically right now is fears of an overheating housing market.

With house prices soaring over the past few years in the US — especially driven by the pandemic — the rapid rise in interest rates that we’re now seeing will have an immediate effect on mortgages, driving a lot of potential homebuyers away from the market now that interest rates are north of 5%.

This, of course, will have an immediate impact on a company like Zillow, which makes its money from homes being sold.

Zillow is not so worried though. Publishing a revised housing forecast earlier this month, the company said it expects US house prices to continue growing by more than 11% this year. Granted, this is a climb-down from the previous forecast of 14.9%, but it still indicates a seller's market, which would benefit Zillow massively.