Shares of Facebook (FB 4.24%), Zoom Video Communications (ZM 4.55%), and Okta (OKTA -1.65%) all jumped sharply on Friday. By the time the market closed, these stocks were up 3.4%, 5.3%, and 6.2%, respectively. At their highest levels during the trading day, shares of these companies rose as much as 4.9%, 6.3%, and 8.6%.
For the most part, there wasn't any meaningful company-specific news driving these stock prices today. Indeed, the primary reason for these stocks' moves may simply be a bullish day in the overall market -- especially for tech stocks.
Highlighting optimism in the stock market on Thursday, the S&P 500 was up 1.3% as of this writing. The tech-heavy Nasdaq Composite, however, was up 2.6%. Even more noteworthy, many tech stocks that are also growth stocks (shares of companies with rapid revenue growth) rose even more steeply than the Nasdaq.
Of course, Facebook, Zoom, and Okta easily qualify as growth stocks. Revenue in their most recent quarters rose 33%, 369%, and 40%, respectively.
The market's strong appetite for growth stocks on Thursday follows a sharp sell-off among tech stocks that recently hit growth stocks particularly hard. Based on their rebounding prices, the market seems to think these stocks were oversold. Even including these stocks' sharp gains on Thursday, Zoom and Okta are still down 18% and 16%, respectively, from mid-February levels. Facebook is only up 1.5%, underperforming the Dow Jones Industrial Average's 3.4% gain over this same timeframe.
An upbeat day in the market on Thursday is likely driven in part by lower-than-expected jobless claims reported by the U.S. Department of Labor. In addition, President Joe Biden signed a $1.9 COVID-19 relief bill, which is largely viewed as a boon for the economy since it means many Americans will receive direct payments.
Investors should remain focused on these three stocks' underlying businesses as opposed to their stocks. Over the long haul, it will likely primarily be business performance that will determine how these stocks perform -- not market headlines or investors' shifting sentiment.
Fortunately, management teams at all three of these companies seem to expect more strong business momentum in 2021.
Facebook management said it expects similarly strong revenue growth -- or even a modest acceleration -- in the first and second quarters of 2021. However, it did warn investors that these growth rates will likely come down in the second half of the year as the company faces off against tough, year-ago comparisons.
Zoom expects full-year fiscal 2022 revenue to be between $3.76 billion and $3.78 billion, up from $2.65 billion in fiscal 2021.
Finally, Okta management expects fiscal 2022 revenue to come in between $1.08 billion and $1.09 billion, up from $835 million of fiscal 2021 revenue.