Cramer Is Bullish On Zoom Despite Two-Day Selloff

This week marked a selloff frenzy for Zoom Video Communications Inc’s (NASDAQ: ZM) stock, with volumes touching 16.6 million and 20.8 million on Monday and Tuesday, respectively. Investors dropped positions despite Zoom’s Q3 earnings beat on Monday.

What Happened: Unfazed by market sentiments, CNBC’ Mad Money’ host Jim Cramer expressed bullish views on “stay-at-home stocks” like Zoom. Cramer continued to remark, “A good market can shake off discouraging news. A great market can ignore it entirely.”

After factoring in the two-day selloffs, Zoom has grown approximately 4.9x times since the beginning of the year.

The cloud-based communications company has been an overall performer throughout the year. Forced lockdown restrictions and strong measures to control the spread of Covid-19 infection drove up the demand for Zoom’s virtual interface.

The remote work culture was easier to streamline using online meeting alternatives like Zoom, Slack — a communications software by Slack Technologies Inc’s (NYSE: WORK), Alphabet Inc’s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google Meet, etc.

Why Does It Matter: The Mad Money show host said that investors are confused about Zoom’s potential. Although Cramer claims that the stock was due for a pullback after the 500% year-to-date run, he reiterated that it still holds promise in a post-pandemic era. It offers a time advantage and cost-benefit by connecting peers from multiple locations. 

Portfolio reallocations could have been one of the factors driving investors to dispose of Zoom’s stock. According to the CNBC report, Wall Street Analysts are shuffling out high-yielding tech stocks to pick positions in others that could gain momentum once the vaccines are available and the pandemic threat subsides.

Zoom reported a 367% year-over-year revenue growth at $777.2 million and beat consensus estimates by 12%. EPS of 99 cents was seven cents higher quarter-over-quarter and beat estimates by 24 cents.

Price Action: ZM shares are up0.42% at $408 in the pre-market session on the last check Wednesday.