In his first "Executive Decision" segment of Mad Money Friday evening, Jim Cramer spoke with Tien Tzuo, founder and CEO of Zuora Inc. (ZUO) , the company ushering in the subscription economy.
Tzuo said the end of ownership is coming and more and more companies are discovering the benefits of using subscriptions to expand their offerings and engage with their customers. Everyone knows Fender guitars, for example, but you might not know the Fender Play service, which will teach you to play guitar for a low monthly fee. Fender has grown their subscription base 10 times during the pandemic as people dusted off their guitars and sharpened their skills.
Tzuo said that many industries are seeing the physical sides of their business shrink, while online components, often powered by subscriptions, expand and flourish.
We looked at ZUO on June 10 and wrote that, " Even though the Point and Figure chart shows a $20 price target, we can see a lot of chart resistance in the $14-$17 area. New longs need to risk a close below $11, but I am not recommending a trade because of all the overhead resistance."
Let's check and see if the newest charts are flourishing yet.
In the updated daily bar chart of ZUO, below, we can see that prices could close above the bottoming 200-day moving average line Monday. The 50-day moving average line still has a strong positive slope.
The daily On-Balance-Volume (OBV) line has moved up to a new high to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator could be crossing to the upside again for a fresh outright go long signal.
In the weekly bar chart of ZUO, below, we don't have Monday's price action included let alone this coming Friday. If the chart was updated now we would be closing above the 40-week moving average line.
The OBV line would probably also make a new high with the MACD oscillator continuing to improve.
In this daily Point and Figure chart of ZUO, below, we can see an upside price target of $16.00. A trade at $17 would be a breakout and open the way for potential gains to the $20-$21 area.
Bottom-line strategy: The charts of ZUO have improved in the past few days so a long recommendation looks better now. Probe the long side here risking a close below $11.90. Targets are $16 and then $20-$21.
