Stock Market Conclusion: Why Zoom and Royal Caribbean Shares Bounced Today


The stock market had a relatively calm day on Thursday, abandoning its first gains as investors were reeling by news of the coronavirus pandemic and its impact on the global economy. Market participants appeared optimistic about the prospects for a return to normal until reports Gilead Sciences(NASDAQ: GILD) The drug candidate remdesivir has failed to deliver the expected results in some clinical trials in China. At the end of the day, the main market benchmarks were mixed, the Dow Jones Industrial Average (DJINDICES: ^ DJI) on the rise, but the S&P 500 (SNPINDEX: ^ GSPC) and Nasdaq Composite (NASDAQ INDEX: ^ IXIC) fall.

Today’s stock exchange

Index

Percent change (decline)

Point change

Dow

0.17%

39

S&P 500

(0.05%)

(2)

Nasdaq Composite

(0.01%)

(1)

Data source: Yahoo! Finance.

Even on a dull day, some stocks performed well. Focus on video communications (NASDAQ: ZM) reached a new stage in the meteoric growth of its activity, while Royal Caribbean Cruises (NYSE: RCL) got a vote of confidence from two analyst firms.

Zoom reaches 300 million users

Zoom Video Communications shares rose 12.5% ​​on Thursday. Investors have chosen to view the good news and bad news about the company in a positive light.

On the favorable side, Zoom saw its daily user count increase to 300 million. This is an increase from 200 million users just a few weeks ago, showing just how popular the video service has become in light of ongoing closures of schools, businesses and others. work places.

Image source: Zoom Video Communications.

On a negative note, however, more companies have decided to cut back on their use of Zoom in light of lingering security concerns. Despite the fact that Zoom has announced the upcoming release of a new version of its platform to address some of these issues, Bank of America and German car manufacturer Daimler have joined other companies to give up fully embracing video communication service.

Security concerns have largely been ignored by investors, however, as they seem appeased by CEO Eric Yuan’s efforts to tailor the platform to the needs of its new users. With so many people using the service, it’s no surprise to see Zoom achieving its status as growth stocks icon.

Royal Caribbean gets analyst approval

Elsewhere, Royal Caribbean Cruises saw shares gain 8%. The cruise ship operator has asked a few analyst firms to comment favorably on the stock as Royal Caribbean seeks to line up new sources of capital for success through its suspension of operations.

Stifel analysts believe that among the major cruise lines, Royal Caribbean is the most likely to find a way to survive the current difficulties in the industry. Favorable factors include brand loyalty among customers, more attractive travel and greater financial liquidity. Stifel raised its price target from $ 8 to $ 48 per share.

Meanwhile, Wells fargo (NYSE: WFC) also had positive things to say about Royal Caribbean. The bank’s securities division believes the cruise line has lower operating costs than its peers, making it better able to handle ongoing closings.

Royal Caribbean is apparently looking for ways to raise even more liquidity to build a capital cushion while it can, with discussions on offering traditional or convertible bonds to raise debt financing or an equity offering. secondary. It’s unclear how quickly cruise ships could pick up speed, but investors are now betting on a quick turnaround.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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