Cramer says Zoom’s post-earnings sell-off is not bad news for stay-home thesis

Zoom Video Communications shares bought off large on Tuesday after the corporate reported robust quarterly outcomes, but it surely’s not but time to surrender on the stay-at-home performs, CNBC’s Jim Cramer mentioned.

“Despite what you heard this morning, vast swathes of our economy remain very strong, and that includes the stay-at-home stocks,” the “Mad Money” host mentioned. “A good market can shake off discouraging news. A great market can ignore it entirely.”

The feedback come after the foremost averages kicked off the final month of 2020 with good points. The Dow Jones rose 185.28, or 0.63%, to a 29,823.92 shut. The S&P 500 rallied 1.13% to three,662.45 and the tech-heavy Nasdaq Composite climbed 1.28% greater to 12,355.11.

Zoom soundly beat top- and bottom-line estimates in its fiscal third-quarter report, which launched Monday. But shares cratered 15% to $406.31 Tuesday after buyers realized that the video conferencing firm’s mouthwatering development price powered by the pandemic may ease sooner or later.

The firm posted $777 million of income within the quarter ended Oct. 31, up 367% from final yr. While that development price is greater than the 355% of development within the earlier quarter, Zoom is anticipating to develop income by about 329% within the fiscal fourth quarter.

Cramer mentioned the inventory, which is up almost 500% yr thus far, was due for a pull again. However, he thinks it has no bearing on the general stay-at-home funding theme.

“The truth is people are confused about Zoom and that confusion created opportunities all over the place today because the immediate pin action … was wrong,” Cramer mentioned.

By pin motion, he is referring to the market phenomenon by which shares of 1 inventory take down shares of a rival. Cramer calls it pin motion as a result of it is just like the best way by which one falling bowling pin can knock over one other pin.

Investors on Wall Street as of late have been rotating good points from high-flying tech shares into names that can profit from the post-pandemic economic system and different cyclical performs.

Cramer, although, is nonetheless advocating for a barbell funding technique, the place buyers have publicity to each the stay-at-home and restoration performs.

Just because Zoom’s insanely high growth is decelerating a tiny little bit, that doesn’t mean the trend is over,” Cramer mentioned. “In fact, I’d argue that it’s never going away because this year has shown us that millions of jobs can be done better from home, no need for that central office.”

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