The newly-public companies Zoom & Beyond Meat saw their stocks rally by double-digits after beating Wall Street expectations in their first earnings reports since their recent IPOs. With Zoom’s share price jumping more than 161%, and Beyond Meat’s nearly 455%, since going public. CNBC’s Jim Cramer has applauded the quarterly results that the two stocks he has been skeptical about, posted as “things of beauty”.
The CNBC “Mad money” host said “I’ve been warning you for months that the recent flood of IPOs was creating a situation where we have a too much supply on hand. Especially after the Uber deal, but some of these deals really were fantastic for investors, and I wish I’d been more bullish about them”.
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Zoom Video’s Stock Performance
Zoom’s share price has risen more than 120 % from its $36 April IPO to $94.05 as of Friday’s close. The video conferencing company has delivered a big revenue beat in its first public report of $122.0 million up from $1117.7. It was expected by analyst and earnings of 3 cents per share, excluding certain items. In the first fiscal quarter, Zoom had 405 customers paying more than $100,000 in revenue over the past year, up from 344 one quarter earlier. It rose 12% high after the first optimistic financial forecast since it’s going public.
Sustainability
Zoom’s revenue more than doubles in the quarter as businesses of all sizes sign on the company’s software. It works across devices, including smartphones, and its stock could jump 17% points or 22%. However, Zoom was profitable in April since its first optimistic IPO forecast.
Challenges
Its only risk will be valuation according to Patrick Walravens of JMP securities wrote last month. As he has initiated coverage with a “market perform” rating. The San Jose, California based producer of plant-based meat substitutes faces competition from the much larger Cisco. But, Cramer highlighted that it landed a positive note from J.P. Morgan saying the quarterly results “underscore our confidence in Zoom as our favorite stock even with the current valuation level.”
Beyond Meat’s Stock Performance
Since listing on early May, Beyond Meat’s stock is now worth less than $139, nearly six times its debut price. The faux meat company, which produces plant-based burgers grew from $36 April IPO to $94.05 as of Friday’s close. The net revenue of Beyond Meat has increased by 2015% to $ 40.2 million in revenue for the quarter while Wall Street expected less than $39million. And gross profit margin increased over 1,000 basis points year over year and almost 200 basis point subsequently.
Sustainability of Beyond Meat
Management is adamant that they make a better burger. And they believe that there’s still a wider room to grow as the meatless category is still just at 2% household penetration. So, they are fighting hard to meet the demand and this can be why the stocks are out of control,” Cramer said. “Beyond Meat has a vegan burger competition in the privately-held Impossible and Nestle. But it has potential deals in the works with fast food chains, Competitors in the vegan burger space. Management has made some missteps and given the company a head start, and it could rally $30 or 30%,” Cramer added.
