“If I was famous I would just Zoom bomb all day.” – Jason

 

Hey there carnivores,

Markets were up on Tuesday since investors “don’t have a conscience”.

And today we’re talking about Zoom’s insane quarter.

Keep raging,

Jeff & Jason

 

 

Ray’s Zoom Zoom Room

Zoom’s business is flourishing. Unfortunately, the video conferencing company’s rise is directly correlated with a global pandemic.

In its Q1 earnings report yesterday, Zoom announced revenue of $328.2M, or, 169% higher than the $122M it earned during the same quarter during the prior year.

YoY growth is one thing, but we all know it’s about the expectations. And Zoom made those it’s b*tch as well. Analysts were expecting only $202.7M in revenue and 9 cents EPS, even with the boon from the coronavirus. Revenue topped $300M and earnings came in at 20 cents.

What’s more? For Zoom, past performance does indicate future results. The company hiked its full-year guidance to between $1.21B and $1.29B, up from $905M. Oh, and Zoom had 173M active users as of May 27 compared to just 14M on March 4. Consider the rookie numbers pumped up.

Out of focus

Despite Zoom’s crazy numbers, the stock actually fell almost 2% after hours. With such large growth in users, Zoom had to outsource some of its cloud computing to AWS. As a result, its gross margin dropped from 82.7% to 68.4%. Jeffrey Commerce FTW.

Finance Chief Kelly Steckelberg acknowledged the increased costs but says Zoom is expanding its cloud computing power and hopes to get that gross margin number back up into the mid-70s.

The bottom line…

The video-conferencing market is here to stay, but Zoom needs to step its game up if it’s going to remain the top choice of remote employees. Microsoft and Facebook each have their own video messaging services and are hungry for market share.

Luckily for Satya and Zuckerbot, security has been a bit of a problem for Zoom, with its laissez-faire attitude towards meeting security. Stories of random people hijacking wholesome meetings led to the NYC department of education to drop Zoom and move over to Microsoft.

☑️ Back in business. 

Bitcoin is back! Kind of. On Tuesday, the flagship cryptocurrency climbed 5% to rise above $10k for the first time since the middle of February. Over the course of the year, Bitcoin has climbed more than 40%.

Crypto has climbed around the world as the idea that digital currency could benefit, as global banks enact stimulus measures to prevent further economic downturn. Those people providing that guidance? Probably still those guys who are the “Boss” of “Mind your own business” on Facebook.

☑️ Pay the man.

Up to one-third of the unemployment benefits due to more than 40M unemployed Americans have yet to be paid out. Through May, the US Treasury Department had paid out $146B in benefits (for the three months ending in May)… a literal f*ckload considering it was more than the entire number paid out in all of 2009 at the height of the financial crisis unemployment surge.

While that seems impressive, the US owes a total of $214B for the period, which it’s struggling to fulfill through processes not designed to handle this number of jobless claims. It’s almost as if they weren’t prepared for a global pandemic to cripple the workforce.

☑️ Money moves. 

Western Union is looking to buy rival MoneyGram. On Tuesday, WU made a takeover offer for its money transfer competitor. It has yet to be determined if WU would pursue a stock takeover if the deal isn’t accepted, but you can be sure the deal will be completed via a wire transfer.

On the news, MoneyGram rose 74%, bringing its market value to $164M. Western Union, on the other hand, climbed 3.5%, bringing its market value to a much heftier $8.5B.

☑️ Autopilot. 

Volkswagen finally closed its $2.6B investment to get into the autonomous car game. On Tuesday it was announced that the company’s investment in Argo AI, a Pittsburgh-based self-driving car firm, was finally completed. The deal was revealed back in July, but clearly there’s been a lot of paperwork to sort through.

VW isn’t the only major car brand to get into bed with Argo. Ford will launch an autonomous commercial service with Argo. That deal was supposed to kick into high gear next year but has been pushed to 2022 amid the global pandemic.

Author: Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

Even greater than his prowess as a trader is his skill and passion in teaching others how to trade and rake in profits while managing risk.

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