Stocks Fall But More Companies Top Earnings Estimates

Dow: -0.07% | Nasdaq: -1.03% | S&P: -0.36%

Catch Up Quick

• AMC shares ($AMC) rose ~95% during regular trading yesterday before falling ~18% & ~7% in regular & afterhours trading today (respectively)

• Microsoft will unveil its new version of Windows on June 24th

• California state reservoirs are 50% lower than normal (UC Davis)

• President Biden is considering a 15% minimum corporate tax rate to pay for infrastructure

• United Airlines ($UAL) is set to buy 15 supersonic jets from aviation startup Boom Supersonic

• Lululemon ($LULU) first-quarter sales beat estimates, rising 88% as store traffic rebounds

• “Warner Bros. Discovery” will be name of company spun off from AT&T

• Gong, a revenue intelligence startup, raised a $250M Series E from Franklin Templeton, Coatue, Salesforce Ventures, Sequoia & Tiger Global

• Twitter ($TWTR) outlined its subscription offering with features like bookmarks, undoing tweets, reader mode and a customized app

• The ex-CEO of Ford says Tesla will face pressure as EV competition rises

Thought of the Day

• With > 40% of the U.S. population fully vaccinated, a lot of investors have been exiting positions of pandemic beneficiaries as society returns to equilibrium

• Zoom ($ZM) recently held its Q1 FY2022 earnings conference which featured revenue growth of a 191% and profit growth of nearly 8.5x during the past 12 months

• Perhaps the most impressive point from the report was that its net dollar retention (“NDR”) has exceeded 130% for the 12th straight quarter

• While the specifics of this calculation get complicated / controversial quickly, since the NDR was far above 100%, expansion revenue (revenue from customers upgrading to more expensive offerings) far exceeded churn (revenue lost from cancelled subscriptions)

• For perspective, the fastest growing SaaS names rarely touch an NDR of 120% (much less exceed 130% for 3 years)

• The remote work vanguard is particularly unique among other tech giants, which in comparison, created new markets and verticals to dominate

• Zoom emerged from a saturated “red ocean” videoconferencing landscape dominated by a Microsoft-owned Skype + a Cisco-owned Webex

• Today, despite strong momentum so far this year, many believe that Zoom fatigue will hinder growth in a post-pandemic world → shares remain down 40% from it’s all time high this past Fall

• However, during the pandemic, Zoom was used for activities that it is not meant for, such as happy hours

• As this changes and Zoom is used less overall moving forward, Zoom fatigue might actually fade as a result, benefitting user sentiment

The Bottom Lines

• Even for companies that refuse to support remote or hybrid work policies, Zoom features could very well encroach on in-person meetings

• For example, teams could have in-person discussions while screen-sharing documents on iPads / laptops (no printing needed), annotating materials real-time for everyone to see as opposed to just referencing items on a print-out

• While the stock remains expensive despite a 6-month sell-off, Zoom has grown its customer base to the point where in-person use cases might uphold expansion revenue, making it an attractive position regardless of workforce type!

Afternoon Audit