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Stock Market News: Zoom Video Zooms Higher; Tenfold Gains for Tesla?

By Dan Caplinger – Feb 3, 2020 at 12:39PM

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Stocks recovered from coronavirus fears Monday morning.

The stock market rebounded Monday morning, regaining some of its lost ground as market participants seemed to have a less pessimistic outlook on the consequences from the coronavirus outbreak. Despite signs that cases are spreading across the globe and an 8% drop in Shanghai's stock market index as Chinese markets reopened following the Lunar New Year holiday, U.S. investors were able to take solace in the fact that the reaction in financial markets across the globe wasn't worse. As of 11 a.m. EST, the Dow Jones Industrial Average (^DJI -2.11%) was up 299 points to 28,555. The S&P 500 (^GSPC -2.80%) had risen 35 points to 3,260, and the Nasdaq Composite (^IXIC -3.80%) was higher by 130 points at 9,281.

Tesla (TSLA -6.32%) once again made headlines with a big share-price advance, following outlandishly positive comments from one stock analyst. But first Zoom Video Communications (ZM -2.25%) saw its shares soar as investors seemed to identify one potential beneficiary of concerns about global travel.

Zoom could win from stay-at-home trends

Zoom Video Communications saw its shares rise 11% Monday morning. The collaboration platform provider didn't have any corporate news to justify the move, but in light of current events, investors responded positively to the value of the services that Zoom provides.

Room with conference table, chairs, and screen with Zoom logo above it.

Image source: Zoom Video Communications.

Most investors have focused on the potential losers from the coronavirus. Companies like airlines and casino resorts have been under considerable pressure because of fears that people will stop traveling and congregating in large groups for entertainment. Travel bans and business closures in China could have significant effects on economic activity there.

Yet the outbreak also highlights the value that Zoom brings to business collaboration. Workers who need to stay home because of health concerns can still work with others without fear of contagion, and international business travelers who can't get to China will need to turn to video communication as an alternative.

That's a huge growth opportunity for Zoom, and it's entirely possible that once people get a taste of the communication platform, they'll want to keep using it. Zoom shareholders hope that they'll be able to see the positive impact long after people have stopped talking about the coronavirus.

Will Tesla stock ever stop rising?

Meanwhile, shares of Tesla climbed another 12%, reaching another all-time record. Yet even with the move higher, some of those following the electric vehicle manufacturer think the stock could be worth 10 times more than it is today.

Analysts at ARK Investment Management have a history of thinking highly of Tesla. When many investors hoped that CEO Elon Musk would take the company private, ARK believed that the stock would actually be worth between $700 and $4,000 per share over the next several years. That was an unusual stance at a time when Musk himself was putting a $420-per-share price tag on the stock.

But over the weekend ARK upped its views, saying that $7,000 per share is a reasonable target by 2024 and suggesting that better-than-expected performance could send the car stock still higher. The analysts believe that autonomous technology and improved cost structures will support Tesla's profitability.

For Tesla's stock to rise so high, it'll have to make good on its promise of transforming the auto industry to prefer electric vehicles. That's looking more likely than ever, and the prospect has Tesla investors salivating as they watch the share price rise.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla and Zoom Video Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$223.07 (-6.32%) $-15.06
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$76.59 (-2.25%) $-1.76
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$29,296.79 (-2.11%) $-630.15
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,639.66 (-2.80%) $-104.86
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$10,652.40 (-3.80%) $-420.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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