When a fad takes hold and user growth accelerates exponentially, the underlying stock will spike higher. Zoom Video (NASDAQ:ZM) rose from $300 to $478 at the start of September only to lose half of those gains.
In hindsight, momentum investors should have sold ZM stock at the height of the euphoria. To Zoom’s credit, the strong subscription rates and growing revenue are reasons to hold the stock. Yet speculators ignored valuations as buying outpaced selling.
Okta (NASDAQ:OKTA), a software firm that reported revenue growth of 43% Y/Y in the second quarter, dipped sharply during the tech-led selling. The company has strong subscription growth. It is benefiting from the accelerated adoption of cloud application, remote access, and higher digital customer experiences demand. Expect OKTA’s trading range to hold the $180 - $230 range. If that breaks down, consider taking profits.
Nio (NYSE:NIO), an EV supplier in China, peaked at over $20. Investors looking for a discount to Tesla stock should not have over-paid. Nio, like Tesla, took advantage of the stock’s rise by selling shares. The cash boost on hand will remove any bankruptcy risks (both firms burn money each quarter). Plus, now that markets are ignoring Nio’s strong monthly delivery numbers, earnings will matter. When Nio posts profits, then investors may seriously consider holding Nio for the long-term.
Tech Insider
