6/13/24 - $zm - ST swing long into today's close ~$586/13/24 :: VROCKSTAR :: NASDAQ:ZM
As written about just 3 weeks ago when they reported EPS, the setup was non-obvious and i remained on the sidelines. we've chopped all over the place but the factor gawds finally got the best of NASDAQ:ZM and basically everything else that's software in the last week and especially the last two sessions.
I HAVE NO IDEA BUT I THINK A FUND IS BLOWING UP AND BEING FORCED TO UNWIND A BOOK THAT INCLUDES A LOT OF SOFTWARE AND THERE ARE NO BIDS
this is conjecture. but i've been around. i sniffed this out on NASDAQ:AAPL vs. NASDAQ:NVDA without knowing exactly what was going on into friday's close.
right now we're in value territory for $zm. remember nearly 40% of this co's value is CASH. i honestly wish they'd stop being stupid and use it to buy stock or just give it back (good riddance). sitting on cash is a low IQ move in this environment for co's. i digress... but it's part of the example of why zoom mgmt sucks among many other factors.
with that caveat out of the way (the point being... we're playing reversion, not world-beater, turn around or anything more interesting), the valuation is simply "too low" all else equal esp as market looks to rip higher (i'll write more on this in a bit, maybe tmr). these dumped names with negative gamma, possible fund hunting (where industry knows who is blowing up and further attacking their portfolio to the short side) as well as the AI-factor... means there's a higher probability 60/40? 70/30? that we resolve higher short term.
i'm swinging long NASDAQ:ZM here at $58 with exit at $60. or i'll sell some calls if/as we get there. but i don't want to get cute. this is a shorter term trade for me. i like the margin of safety on the cash balance, buyback, the EPS adj. for cash is ~7x at this pt - honestly too low. take out territory etc. any narrative works more than "it's going lower" - b/c it can - but why.
be safe out there, but there's a lot of software now selling at deep discount. not all of it. much of it is going lower. but know where to pick spots to take stabs as we remain tape risk on.
V
