Please ensure Javascript is enabled for purposes of website accessibility

Nasdaq Today: Why Zoom and Marriott Soared Monday

By Dan Caplinger - Jun 1, 2020 at 3:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The broader Nasdaq's gains were solid.

The stock market continued to gain ground on Monday, lifted by optimism that coronavirus-inspired shutdowns will continue to lift and stop weighing on economic recovery. As of around 3 p.m. EDT, the Nasdaq Composite (^IXIC -0.08%) had picked up about three-quarters of a percent. The Nasdaq 100 Index of top Nasdaq stocks saw slightly more muted gains of around 0.4%, which was more in line with the broader market's rise.

Among Nasdaq 100 stocks, however, two companies stood out. Zoom Video Communications (ZM -3.35%) once again led the index higher, and Marriott International (MAR 2.04%) also posted impressive gains that reflected hopes of returning to a viable new normal in the near future.

Multi-story hotel building with Marriott logo on side, against an overcast sky near dusk.

Image source: Marriott.

Zooming expectations

Shares of Zoom Video Communications climbed another 13% Monday afternoon, adding to substantial gains recently. With the video conferencing platform provider set to release its latest financial report on Tuesday, investors are apparently getting a head start in celebrating what everyone believes will be an exceptional quarter.

It's easy to understand why Zoom shareholders are so optimistic. The coronavirus pandemic and its related shutdown of a huge swath of the global economy have forced hundreds of millions of people to use Zoom's platform to communicate. Although the company has had its share of glitches during the ramp-up period, Zoom has done a good job of responding to concerns on issues like security while keeping the service up and running despite the huge uptick in traffic.

Exactly how much Zoom could benefit in the short run from its increased popularity is uncertain. Those following the stock expect around an 80% rise in revenue for the quarter compared to year-ago levels, but the range of growth projections is wide, going from roughly 70% to 100%. Zoom's bottom line is expected to see sizable gains on a percentage basis, but the tech stock's profit will remain at best minuscule in comparison to its current stock price.

Zoom investors are counting on the company to hang onto the new clients it won as the pandemic spread. If even a fraction of the hundreds of millions of users actually sign up and pay for the service over the long run, it could prove to be a huge winner for Zoom.

Marriott opens up

Elsewhere, Marriott International's shares saw gains of 7%. Even as hotels remain under pressure, signs of a possible return to normal boosted share prices.

Marriott CEO Arne Sorenson gave an upbeat sense of a possible recovery in discussions at an industry conference. The hotelier has opened all of its locations in China, and it's also starting to see numbers recover in the U.S. hotel market. Occupancy rates are still modest, at around 40% in China and 20% in the U.S., but there are signs of progress in getting more properties open across the globe.

Despite the substantial use of Zoom and other video conferencing services in the business community, Marriott is seeing more of a positive response from business travel than on the leisure travel front. Hotel locations where business travelers are most likely to drive rather than fly are doing the best, according to the Marriott CEO.

Travel stocks have done well lately as the economy has started to reopen, and Marriott investors hope that today's gains will be just the beginning of a broader advance. Much will depend on whether reopening efforts cause a new uptick in COVID-19 case counts, but the hotelier is optimistic that things can continue to return to normal.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool recommends Marriott International and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Marriott International, Inc. Stock Quote
Marriott International, Inc.
MAR
$166.51 (2.04%) $3.33
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$109.44 (-3.35%) $-3.79
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$13,117.83 (-0.08%) $-10.22

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
403%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.