Stocks Jump On Frenzy Friday Ahead of Miracle Monday
Monster Market Commentary

Stocks Jump On Frenzy Friday Ahead of Miracle Monday

11.13.20

Stocks – ZM, TWLO

Macro –  SPY

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Stocks were higher today, probably the Friday run-up in anticipation of miracle Monday. Miracle Monday is when some unexpected piece of news suddenly comes out late Sunday night or Monday morning, to pump the futures higher. This has been a common occurrence since April. I think Moderna is up for vaccine data, what better day than Monday. 

S&P 500 (SPY) 

Anyway, the S&P 500 was up nearly 1.4% to close at a record high of 3,585. The consolidation pattern has been nice, and stronger than expected. It will probably lead to pop high on Monday. The pattern vaguely resembles a flag, maybe a pennant, samething I guess. I’ll let you know on Sunday where I think it goes. 

Zoom (ZM)

Zoom didn’t perform so well today in an up-market, probably not a great sign for what’s to come after options expiration next week.  I wrote an article this week talk about how overvalued this stock was, and people don’t want to hear it. I’m sorry, but the facts are the facts, the stock is grossly overvalued and would need some crazy growth over the next 2 years to make its current valuation make any sense. I just don’t see it. Anyway, I still think it sees $325. 

Think what you want, but the facts are — it trades at 94 times free cash flow estimates in 2023, 29 times sales, 102 times EV/EBITDA, and 124 times earnings. It has a market cap of $115 billion. And don’t tell me about how it is a bet on the future, I’m the guy that held Tesla for the past 6 years, and bought Netflix before international growth even started, I’m well aware of how it works. 

It doesn’t have anything to do with my view on the market either, after all, I think the SPX is going to 4,000 before the end of 2021. 

Twilio (TWLO) 

But believe it or not, Twilio makes Zoom look cheap. Twilio, trades for 305 times 2022 cash flow, 725 times earnings, 15 times EV/EBITDA, and almost 16 times sales. And earnings are expected to fall this year and next year, before rising in 2022. Revenue growth is reasonable in the high 20s to low 30% range. But it is hard to digest the $44 billion market cap. I know valuations aren’t supposed to matter, but one day they will. Just hope it doesn’t break the lower bound of the megaphone that has formed. It will probably result in a gap fill to around $122. 

Anyway, that’s enough for Friday. 

-Mike

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