As I text, ZS stock is down 5% and OKTA is up 12%. ZS was down 10% last night after hours, but clearly rebounded before opening. Both released incredible earnings yesterday, but I actually give ZS the edge as they continued to show accelerating strong growth. Why is the stock down then today? Any number of factors. Could be some profit-taking from traders. It has seen an incredible climb. But the numbers released last night substantiated their high valuation. Q/Q revenue growth was a screaming 61% growth! Gross Margins were 82%. 1-year Billings growth was 65% and deferred revenue grew to $211m, 70% growth y/y and very good indication of continued blistering growth. I will look into the numbers further over the next few days but see no warning signs and lots of green lights right now for this cyber security company. They also received several upgrades by analysts this morning… I will repeat, I don’t follow the analysts as they are often a lagging indicator, but I’m certainly happy when they follow me and substantiate a company I’ve owned almost a year now. Certainly loving my OKTA position today…with the 12% surge today, they slide past ZS to take the 4th largest position today. Happy Friday, folks!
User comment: Maybe whisper numbers on ZS were higher? Just speculation.
Victor: You are Probably right. It is an exhausting silly game with the analysts and traders. That’s why I just try to invest in solid companies and avoid the gamesmanship and politics , If I can… or use it as an opportunity to pick up some more shares if I want some.
Another good example of selling the news is TWLO on 4/30. It was down 5-6% on their earnings call announcement also…despite ridiculously incredible earnings and 81% revenue growth…and it is up nicely since then and today up another 6% (just today and with the market down 1% today) in light of Trumps tariff war on a second front with Mexico now. Ugh. 😑
User comment: It’s a long game for sure
Victor: Yep! It’s those teenagers trying to drag race that often get slaughtered! 😉
MDB, ESTC and SMAR all release earnings this week on Wednesday AMC. OKTA and ZS had fantastic earnings for the quarter and continued their growth stories. I hope and expect to see the same the week with these three. Take 30 min to read and/or listen to an earnings call…very informative and often fun to learn the latest direction of the digital revolution we are in right now. Cheers!
Rough month of May for the indexes:
The S&P 500 (Large Cap)
Closed up 9.8% year-to-date. (It started the year at 2507 and is now at 2752). It was up 17.3% at the end of April so it gave up 43.4% of its year-to-date gains during May.
The Russell 2000 (Small and Mid Cap)
Closed up 11.1% year-to-date. (It started the year at 1349 and is now at 1465). It was up 18.0% at the end of April so it gave up 38.3% of its year-to-date gains in May.
The IJS ETF (Small Cap Value)
Closed up 5.1% year-to-date. (It started the year at 131.9 and is now at 138.6). It was up 17.3% at the end of April so it gave up 70.5% of its year-to-date gains in May.
These three indexes
Averaged up 8.7% year-to-date. They were up 17.5% at the end of April so they gave up 50.3% of their previous year-to-date gains in May.
If you throw in the Dow, which is up 6.4% and the Nasdaq, which is up 12.3% you get up 8.9% for the five of them year to date. They were up 17.8% at the end of April so they dropped almost 9 points on average in a month, and they gave up 50.0% of their previous year-to-date gains in May.
My portfolio for the month of May is down about 2%, settling in at just over 49% YTD (a little more than 5x the average of the indexes YTD). While the indexes combined all took large hits in May, giving up about 50% of their gains YTD, we only gave up 2% overall. I can certainly live with that for now and hope we get a bounce back later this week. Incidentally, I attribute the entire month of may primarily to geopolitical (Tariff Wars, Mexico, etc) and other external factor concerns rather than a failure of any of my companies to perform or post incredible results…so far!! 3 more on Wednesday.
PS- I took a very small nibble of less than 1% to buy ZM today. Having done a precursory review of the S-1 and knowing they are about to release their first public earnings on June 6, its very likely they will exceed 100% q/q revenue growth. I sometime like to take a very small position just to force myself to do my homework and follow it. When I am satisfied they are continuing to have blistering growth, I will may purchase more in up to 4 or 5 follow on purchases. At this point I am concerned about the incredible valuation of the company and will keep it to a very tiny position…my 10th and smallest allocation. People to seem to LOVE this company though! (Brandon 😉)
Wall Street Breakfast: The Big Tech Crackdown
https://seekingalpha.com/article/4268127
https://www.cnbc.com/2019/05/31/the-trade-desk-is-growing-in-china-and-wall-street-loves-it.html
If you were watching, yesterday was a rough day. Today is a little better!! 😜
