Monday's Headlines: Chinese Stocks Rally on Easing of Restrictions
Here were the biggest movers in the MyWallSt shortlist on Friday:
Moving Up ⬆️
Baozun (BZUN) +17.1%
Smartsheet (SMAR) +16.6%
Peloton Interactive (PTON) +13.0%
Farfetch (FTCH) +8.5%
Moving Down ⬇️
2U (TWOU) -9.2%
Veeva Systems (VEEV) -8.6%
PayPal (PYPL) -4.9%
Datadog (DDOG) -4.2%
Zoom Communications (ZM) -4.0%
Chinese Stocks Rally on Easing of Restrictions 🇨🇳
Chinese stocks are trading higher today after the government agreed to relax certain COVID-19 restrictions in the region. This weekend authorities did away with the requirement to have a negative test before taking public transportation or entering public outdoor venues. This hopefully portends that the restrictive COVID-zero policy may soon come to an end.
Tech giants Tencent and Alibaba are up 6% and 9% respectively on the Hong Kong exchange. Shares of MyWallSt picks Huazhu Hotel Group and Baozun are both up double digits too.
Chinese stocks have been incredibly volatile thanks to overarching government policy, but this weekend’s announcement gives a sense of hope that it is finally moving towards an eventual reopening of its economy. It comes off the back of widescale protests in the region, the likes of which were not seen before in Xi Jinping’s reign as President.
Wall Street analysts are buoyed by the announcement, with Morgan Stanley raising its outlook for Chinese equities to overweight for the first time in two years. Strategists at Saxo Markets Hong Kong believe that this increases the chances of a stronger Chinese economic rebound next year.
PagerDuty Pops on Earnings Surprise ☁️
Shares of PagerDuty popped 5% on Friday after it reported earnings for Q3 of its fiscal 2023. The DevOps company outperformed expectations and delivered better-than-anticipated results on both the top and bottom lines to notch a nice gain for the day.
Revenue of $94 million for the quarter beat out its own guidance ever so slightly, while non-GAAP operating profit came in at $3 million, with the Street expecting a loss. Management expects to deliver revenue growth of 26% — at the midpoint — for Q4 while forecasting a non-GAAP net profit for the quarter.
The positive quarter comes at a time when many companies are pulling back on their IT spending, however, PagerDuty has proven to be immune, at least for now. CEO Jennifer Tajeda commented on the company’s durable quarter:
"PagerDuty delivered another strong quarter, exceeding the high end of both our top and bottom line ranges, with revenue up 31% year on year, and operating margin improving 1,000 basis points to achieve profitability a quarter ahead of expectations. Despite a volatile macroeconomic backdrop, we made significant progress in realizing profitable, durable growth. PagerDuty’s Operations Cloud deploys easily, has a high ROI, and low cost of ownership – more relevant than ever in today’s environment. Our enterprise customers remain focused on minimizing the impact of incidents to protect revenue and deliver great customer experiences while reducing their costs. For them, PagerDuty is essential infrastructure.”
Smartsheet Surges on Strong Earnings 📈
Shares of Smartsheet soared 17% on Friday off the back of a strong Q3 earnings report. The accounting software specialist beat out analysts’ expectations across the board, with revenue of $200 million — representing growth of 38% year-over-year — and a GAAP loss of $0.31 a share blowing past Wall Street’s forecast of $194 million in revenue and a loss of $0.48 a share.
Management’s guidance for Q4 and the full fiscal year 2023 were both comfortably ahead of expectations too, adding to Friday’s surge in stock price. It also expects to be free cash flow positive for the year which will be music to the ears of many investors.
The call also included a number of customer highlights, including a fantastic net-dollar retention rate of 129%, 55% growth in customers worth more than $100,000, and a 25% increase in annual contract value for its average customer. CEO and President Mark Mader had this to say:
“In the current challenging macro environment, customers are turning to Smartsheet to help execute more strategically and efficiently, and are realizing a rapid return on investment. Looking ahead, I am confident in our ability to continue to unlock significant value for our customers, and generate durable, long-term growth with improving profitability.”
Smartsheet is still down 50% in 2022 after Friday’s surge.