Stocks diverged widely on Friday, with the Dow Jones index of industrial companies closing slightly down for the day, but the tech-heavy Nasdaq zooming 1.3% higher.
Three tech stocks stood out as big winners:
- E-signature company DocuSign (NASDAQ:DOCU) closed up 9.3%, near its high for the day.
- Cybersecurity company CrowdStrike Holdings (NASDAQ:CRWD) ended the day up 10.4%.
- And videoconferencing star Zoom Video Communications (NASDAQ:ZM) rose 9.7%, also close to its high for the day.
On a day when tech stocks were perceived to be popular, it stands to reason that these three would be among the names people were buying. None of the three had any news of note today. But DocuSign, CrowdStrike, and Zoom Video are all getting ready to report earnings next week.
Zoom will probably be first to report on Tuesday, June 2. And in contrast to other companies that have struggled to grow earnings in the coronavirus crisis, Zoom is expected to do just fine. More than fine, in fact: Analysts who follow the company think Zoom could potentially report as much as 81% year-over-year sales growth to $202 million in revenue and triple its earnings to $0.09 per share.
CrowdStrike, too, has chosen June 2 as its earnings date, and here, too, the news is expected to be good (with caveats). Wall Street predicts it will regale investors with stories of 72% sales growth. Earnings will probably be negative. But at a predicted loss of $0.06 per share, that's a lot less negative than the $0.47 per share that CrowdStrike lost a year ago.
Last but not least comes DocuSign, reporting earnings after the close of trading on Thursday, June 4. Here, sales aren't expected to grow quite as quickly as at the other two tech companies, but if the analysts are right, their forecast of 31% sales growth (to $281 million) will be none too shabby. Earnings won't grow as quickly as with the others, either, but analysts think $0.10 per share should be doable, and that would be 43% better than last year's Q1 earnings. Definitely nothing to complain about.
Investors have every reason to expect they will see very strong growth at all three of these tech companies, and they spent Friday loading up on shares precisely because they expect to be wowed next week.
But woe betide the tech stock that fails to deliver.