Sometimes Wall Street does the right thing. Sometimes everybody wins.
These two companies needed to report blowouts because their stocks have rocketed higher in anticipation of good numbers and projections. They weren't just good they were fabulous. That's how Zoom's stock could jump 17 points or 22%, and the stock of Beyond Meat can rally $30 or 30%. Keep in mind Beyond Meat's IPO was priced at $25 and it is now at $128, and Zoom came at $36 and it is now at $95.
Why do I say that Wall Street did right by you? Because we have seen some real duds of late, notably Lyft (LYFT) and Uber (UBER) , where the stocks were priced at levels that were big wins for the companies and not so hot for the customer.
That's not supposed to be the way it works. You want the buyer to make a lot of money and the company to build good will and, ultimately, over time, shareholders will be able to cash out at much higher levels or the company itself can issue its next tranche of stock at these stratospheric levels.
Make no mistake about it, these ARE stratosopheric levels: Beyond Meat is right now a meatless burger and sausage company with products loaded with chemicals. Zoom is a dominant video company with omnipresent screens that seem to be everywhere at an enterprise, but the company faces some fierce competition by the much larger Cisco (CSCO) .
Both could be easily imperiled.
But forget the stock for a moment - and for me that's a very big deal. The fact is both of these companies are performing at the top of their game. For Beyond Meat total net revenue increased 215% to $40.2 million. Gross profit margin increased over 1000 basis points year over year and almost 200 basis points sequentially. Adjusted EBITDA improved 50% versus last year's first quarter. All of these numbers were both well ahead of plan and of what Wall Street was looking for. The company has a number of irons in the fire including the possibility of some big wins among fast food, maybe Restaurant Brands (QSR) Burger King, maybe even McDonald's (MCD) which currently is trailing Nestle's (NSRGY) burger in 1400 of its German stores. Beyond Meat's management, when asked about the competition, explained that they have all made a number of mistakes and miscues that has given Beyond Meat a real head start. Management's adamant that they make a better burger and given that there is only 2% household penetration, and they are fighting mightily to meet demand, you can see why the stock's been out of control.
In many ways Zoom was even better. The company had a huge top and bottom line beat. The company added 7,700 customers, the best quarter in their history. The company signed four deals with an annual recurring revenue in excess of $1 million. As JP Morgan said in a terrific note: "This is what you want to see out of a company for the first quarter post IPO. Numbers across the board were significantly ahead of estimates and the quarter was clean. The continued rapid adoption by existing customers, big upside in new customer additions and early traction on Zoom phone point to a long runway of growth. These results underscore our confidence in Zoom as our favorite stock even with the current valuation level."
You know I have said endlessly that this market could get hurt by too much supply and it was after Uber. But these deals were brought with the idea that homegamers and institutions alike should be able to get gifts for all of their investing.
I say two cheers for Zoom and Beyond Meat. They may be too rich now, but they made you rich if you stuck with them.