Three Stocks That Went Up on Wall Street’s Worst Day

Square, Zoom Video, and Upwork defied the trend yesterday.

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What happened

If you thought the coronavirus crisis on Wall Street couldn’t get any worse after Wednesday — surprise! — it just did. Markets that were merely shaky earlier in the day on Thursday ended in a rout in the closing minutes of trading. When the closing bells rang, the Dow Jones Industrial Average and the S&P 500 were both down 4.4%, and the Nasdaq had fallen 4.6%.

In percentage terms, this was the eighth biggest drop in the Dow in history. By “points” lost, however, it was Wall Street’s worst day ever.

And yet, even on this arguably worst day in recorded Dow history, three tech stocks managed to buck the tide. As stocks fell left and right around them, shares of fintech stock Square (NYSE: SQ) closed the day up 3.6%; remote videoconferencer Zoom Video (NASDAQ: ZM) closed up 6.2%; and online freelance work-finder Upwork (NASDAQ: UPWK) closed up 7.3%.

So what

What made these three stocks defy the downtrend? Each company had its own specific reasons for showing strength yesterday.

In the case of Zoom, for example, analysts at Bernstein in a note today observed that “average daily downloads” of Zoom’s app “are up 90% … in the last 30 days alone,” compared to last month, and “user engagement” is up, as well. So far this year, Zoom has added more new users than it did in all of 2019.

At Upwork and Square, meanwhile, it was earnings that drove stock gains.

Upwork reported positive profits in Q4 ($0.03 per share) versus the loss Wall Street had anticipated. Upwork also beat on sales in the quarter. Even with the company guiding to lower revenues than analysts had predicted in the year ahead, Upwork’s news stood in such stark contrast to what everyone else has been saying lately that the stock really couldn’t help but go up.

Square said it earned $0.83 per share last quarter, which appears to be far more than the $0.21 per share that Wall Street was expecting (although points out that Square’s numbers “may not be comparable” to Wall Street’s consensus). Like Zoom, Square guided cautiously on the year ahead, but its first-quarter 2020 guidance, at least — $0.16 to $0.18 per share in profit — appears likely to beat Street expectations for $0.16.

Now what

As businesses build on the idea of permitting workers to interact remotely — in contrast to close enough for person-to-person transmission of the coronavirus — both Upwork and Zoom appear well-positioned to not just survive, but also potentially thrive in this current health crisis. Square, which is tied more to in-person sales transactions, may yet see its sales slide if the contagion worsens. For the time being, however, let’s just be pleased with its Q4 performance.

In fact, on a day like yesterday, let’s just be happy that any company is still doing well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Square and Zoom Video Communications. The Motley Fool recommends Upwork and recommends the following options: short March 2020 $70 puts on Square and short May 2020 $120 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

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