What happened 

After climbing for most of the year, interest rates have fallen sharply over the last month. In the last day, the U.S. 10-year treasury rate is down five basis points to 2.78% while Germany's 10-year is down six basis points to 0.89% and the U.K.'s is down 10 basis points to 1.95%. 

Investors were pouring back into high-growth stocks early this week ahead of a very busy few days for earnings. One of the drivers was falling interest rates, but investors also seem to be thinking that the worst of the market's drop is behind us. 

Shares of Zoom Video Communications (NASDAQ: ZM) jumped as much as 5.2%, while Asana (NYSE: ASAN) was up 13.5% and fuboTV (NYSE: FUBO) popped 16.4%. Shares of the stocks were up 3.1%, 13.2%, and 13.8% respectively at 11:30 a.m. ET. 

So what 

Investors often discount expected future cash flows by a discount rate derived from the 10-year rate, so falling rates are often seen as great news for equity values. 

Fubo made news last week by saying it was looking for strategic alternatives for its gambling business. The company has been burning through cash, and with its falling stock price it's time to focus the business on becoming more sustainable. 

Asana and Zoom both release quarterly results later this month, and that could give more clarity about their growth prospects long-term. For now, the "risk-on" trade is enough to push shares higher. 

Now what 

At some point, growth stocks will be undervalued by the market, and we may be seeing that in pockets. You can see in the chart below that all three of these companies have grown at a rapid clip over the past year, but their stocks are down dramatically. 

ZM data by YCharts

Lower interest rates might help these stocks in the short term, but over the long term they'll need to generate cash flow to survive. Zoom is already generating cash, but Asana and FuboTV may need to both grow the top line and cut expenses to survive. 

I think the recovery in growth stocks will continue this year, but it won't be even. Not every company will survive, and we're already seeing some companies be sold for fire sale prices compared to their stock peaks. Asana and FuboTV may be on that list if they aren't able to get operations to a sustainable point. 

For now, today's move should be seen as noise in a wild market, but when earnings are released, we'll know more about the future of these companies. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why US growth stocks jumped today appeared first on The Motley Fool Australia.

When analyzing the quality of companies, investors often focus on financial metrics such as earnings growth or the strength of the balance sheet. And while financial metrics are certainly an integral part of any investment analysis, investors can benefit by looking at nontraditional statistics to find high-quality businesses.

Two areas that are often indicators of an excellent company are employee and customer satisfaction. Great businesses aim to maximize value for all stakeholders, not just the shareholders.

Two metrics investors can use to measure customer and employee loyalty are net promoter scores and Glassdoor ratings.

Net promoter scores

The net promoter score (NPS) is a measurement of how likely a brand's customers are to promote it to others. It's produced by conducting a simple survey asking how likely a customer is to recommend the product or service to a friend.

Not every company will take the time to conduct these surveys, but those serious about their brand image will hire outside marketing firms to survey their customers on an annual or semi-annual basis. 

The NPS is derived by subtracting the percentage of detractors (not likely to recommend the product) from the percentage of promoters (very likely to recommend). The resulting score ranges from negative 100 to 100.

A negative score is a big red flag as that means the majority of customers would not recommend the product, while a score of greater than 60 is generally considered the mark of a highly regarded brand.

Marketing firm Invesp estimates word-of-mouth promotion accounts for $6 trillion in annual consumer spending and is five times more effective than paid marketing. So, a high NPS score not only indicates customers love a company's products, but also means the business likely needs to spend less on marketing to drive sales.

To find a company's NPS, you'll have to do some digging. The company's investor relations page is a good place to start, as businesses with high scores will often share them in presentations or shareholder letters.

There are also companies like Comparably, which conducts its own independent NPS surveys on hundreds of major brands.

Footwear apparel company Allbirds (NASDAQ: BIRD) shared its impressive net promoter score of 86 in its most recent investor presentation. The customer loyalty for this brand is best in class, which is why the company reports over 50% of its revenue comes from repeat customers.

The strength of a company's brand can be difficult to measure by simply looking at financials. But fortunately, net promoter scores offer investors an alternative metric to gauge customer sentiment.

Glassdoor ratings

Employee happiness is another great indicator of a strong business.

Glassdoor provides incredibly valuable insights into a company's employee sentiment. You can read employee reviews, see how likely they are to recommend their employer to a friend, and even find the percentage of employees who approve of the CEO.

This is a wealth of data that many investors miss by exclusively looking at financial statements during their research. Many of the top companies in the world, such as Alphabet (NASDAQ: GOOG) and Amazon.com (NASDAQ: AMZN), have remained industry leaders for years because of their ability to attract top talent to their employee ranks.

In 2021, Gartner (NYSE: IT) found that 48% of companies in a survey had serious concerns about mass turnover. Employee turnover is not only extremely costly, but it can also be highly disruptive to the company's execution.

Thus, positive Glassdoor reviews and ratings can give investors confidence that a business is both attracting and, more importantly, retaining top talent.

Zoom Video Communications (NASDAQ: ZM) is a perfect example of a business with incredibly high Glassdoor metrics. Some 88% of employees say they would recommend the company to a friend, and a staggering 94% of employees approve of CEO Eric Yuan.

While the company's stock has taken a beating due to the recent risk-off sentiment in the market, the Glassdoor reviews show a strong company beloved by its employees.

Outside-the-box thinking

Long-term investors can give themselves an edge by thinking outside the box when conducting their research. Net promoter scores and Glassdoor reviews are two ways you can gain unique insights into the strength of a business in pursuit of market-beating returns.

Just remember, as with traditional metrics like those found on the balance sheet or income statement, it's important to consider the whole picture of a business and not make investment decisions based on a single attribute or number.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 2 important investing metrics you won't find on a financial statement appeared first on The Motley Fool Australia.

Since peaking in November, the tech-heavy Nasdaq Composite has dropped nearly 15%, putting the index in correction territory. And many individual stocks have fallen much further. For instance, shares of DocuSign (NASDAQ: DOCU) and Zoom Video Communications (NASDAQ: ZM) have dropped 63% and 78%, respectively, from their highs, as Wall Street continues to weigh the impact of high inflation and potential interest rate hikes on corporate profitability.

Many investors have also categorized DocuSign and Zoom as "pandemic stocks," citing slowing revenue growth as cause for alarm. But, arguably, nothing could be further from the truth. Both businesses play an important role in digital transformation, and their services should only become more valuable in the years ahead. Better yet, both stocks look relatively cheap right now.

Here's what you should know. 

1. DocuSign

Agreements are an essential part of any business. Organizations form agreements with customers, employees, and partners, but traditional paper-based processes -- such as printing, signing, and taking action on a physical document -- are slow, costly, and prone to errors. With its Agreement Cloud, DocuSign aims to accelerate and simplify workflow by digitizing and automating the agreement process. Its platform spans over a dozen applications, and it integrates with over 350 other technologies.

At its core is DocuSign eSignature, a product that allows documents to be signed in a digital, secure, and legally valid manner, on virtually any device. But the company's portfolio also includes tools for automatic contract generation, AI-powered analytics and risk scoring, and payment collection. Collectively, those tools help clients work more quickly and efficiently.

Founded in 2003, DocuSign is a pioneer in the e-signature industry, and the company has parlayed its first-mover status into a robust competitive edge. DocuSign ranks as the No. 1 e-signature tool, holding over 70% market share, and its platform boasts a net promoter score (NPS) of 72. For context, the NPS is designed to measure the customer experience, and 50 is an impressive score, but an NPS of 70 (or higher) is considered world class. 

Not surprisingly, DocuSign's strong competitive position and excellent rapport with customers have fueled impressive growth. Over the past year, the company's customer base expanded 34% to 1.1 million; revenue soared 51% to $2 billion; and free cash flow skyrocketed 125% to $418.7 million. More importantly, management puts its addressable market at $50 billion, meaning DocuSign still has plenty of room to grow. And with the stock trading at 11.4 times sales -- significantly cheaper than its three-year average of 22 times sales -- now could be a good time to buy a few shares.

2. Zoom Video Communications

Zoom became a household name during the pandemic. Its core product, videoconferencing app Zoom Meetings, helped socially distanced friends and families stay in touch, while allowing students and employees to learn and work remotely. However, Zoom is more than a videoconferencing application; it's a communications company, and its platform also includes a cloud-based phone system (Zoom Phone) and a software-based collaboration suite for hybrid workforces (Zoom Rooms). 

While some employees have already returned to the office, remote work is likely here to stay. In fact, research firm Gartner believes that 48% of employees will work remotely at least part time in a post-COVID world, up from 30% prior to the pandemic. And Gartner says that by 2024 just 25% of enterprise meetings will take place in person, down from 60% in 2019. Both of those trends are good news for Zoom and its shareholders.

Better yet, Zoom is actually becoming more popular. In the videoconferencing space, the company captured 49% market share in 2021, up from 26% in 2020. Even more impressive, Zoom is actually the fifth most popular enterprise application of any kind, according to Okta's 2022 Business at Work report.

In the most recent quarter, Zoom hit 512,100 customers, up 18%. And the company has kept its expansion rate above 130% for the last 14 quarters, meaning the average customer consistently spends 30% more. Fueled by that stickiness, revenue soared 100% to $3.9 billion over the past year, and free cash flow rose 59% to $1.7 billion. More importantly, management puts its market opportunity at $91 billion by 2025, leaving plenty of room for future growth. And with the stock trading at 9.7 times sales -- near its cheapest valuation since going public in 2019 -- now could be a good time to take a closer look at this beaten-down tech company. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Market correction: 2 top tech stocks down 63% and 78% appeared first on The Motley Fool Australia.

This has been a tough year for ARK Invest founder and CEO Cathie Wood. Her style of investing has fallen out of favor, and many of her larger holdings have shed more than half of their peak values.

Among her funds' holdings, Twilio (NYSE: TWLO), Zoom Video Communications (NASDAQ: ZM), and Toast (NYSE: TOST) are down by 43%, 56%, and 50%, respectively, from the all-time highs they hit earlier this year. ARK Invest added to all three positions on Wednesday.

Twilio

The best performer on this list -- relatively speaking, of course -- is Twilio, which has shed more than 40% of its value since peaking in February. It's a pretty dynamic company, providing developers of some of the most popular smartphone apps with in-app communication solutions. 

What does this mean exactly? Well, if you're hailing a ride, it's Twilio helping you communicate with your driver. Twilio can help parties communicate by text or voice without having to leave a business's app or reveal sensitive contact information. Its success is tethered to the success of its active customers, which now number more than 250,000. Its dollar-based net expansion rate of 131% means that its returning developer clients are, on average, spending 31% more with Twilio than they were a year ago. This is a testament to both increased usage volume and the company's ability to "land and expand" with other platform offerings. 

Twilio's revenue soared by 65% in its latest quarter, but acquisitions have typically padded its top line. Organic revenue rose by just 38%, and that result didn't please the market despite it being a healthy rate of year-over-year improvement. Investors are also concerned about larger than expected losses in Twilio's refreshed guidance, but you have to give the company the benefit of the doubt when it comes to investing in its future. 

Zoom Video Communications

Another stock that was doing poorly this year even before its latest financial update sent the shares even lower is Zoom. The videoconferencing giant erupted onto the scene early last year when people found themselves in sudden need of an intuitive videoconferencing solution that would allow them to keep learning, working, and socializing during the early months of the COVID-19 crisis. 

The public isn't as interested in the stock these days, but the irony here is that Zoom is still growing, even as we're now in the third quarter of lapping pandemic-era financials. Its revenue rose 35% in its most recent quarter, beating expectations and signaling that the platform's premium subscriptions are still essential purchases. Management is guiding for growth to decelerate to 19% in the current quarter, and even a recently botched acquisition isn't stopping the company from expanding its offerings to take advantage of its still sizable audience. 

Toast

Restaurants are Toast these days, and that capitalization isn't a typo. More than 48,000 restaurants are leaning heavily on Toast, a cloud-based platform that manages everything from incoming orders to inventory management to customer loyalty programs. 

Revenue skyrocketed by 105% through the first nine months of this year, and that was after climbing 24% in 2020 when most eateries were running with scaled-back operations. As we venture out to our favorite restaurants again -- and as Toast helps owners with the tech required to handle the boom in digital take-out and third-party delivery app orders -- Toast is well-positioned as a reopening play. But the stock has shed half of its value since peaking shortly after the company went public in late September.  

Twilio, Zoom, and Toast remain viable growth stocks. They're just a lot cheaper now than they were earlier this year, and ARK Invest's Wood isn't afraid to follow some of her favorite stocks lower. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Cathie Wood goes bargain hunting: 3 stocks she just bought appeared first on The Motley Fool Australia.

What happened?

Shares of Zoom Video Communications Inc (NASDAQ: ZM) fell 14.7% on Tuesday after the cloud communications leader's slowing growth troubled analysts and investors.

So what?

Zoom's revenue jumped 35% year over year to $1.05 billion in its fiscal 2022 third quarter. That marked a significant deceleration from the 54% growth the video-chat company experienced in the second quarter and the staggering 367% growth it delivered in the third quarter of 2021. 

To offset the slowdown, Zoom has placed a point of emphasis on expanding its relationships with larger companies, with tools such as its Zoom Rooms video conference room solutions that make it easier for onsite and offsite employees to communicate.

Zoom had 2,507 customers contributing more than $100,000 in trailing 12-month revenue at the end of the third quarter, up 94% from the same period a year ago. These dynamics can also be seen in its net dollar expansion rate in customers with more than 10 employees, which checked in above 130% for the 11th straight quarter.

All told, Zoom's adjusted net income increased 14% to $338.4 million, or $1.11 per share.

Now what?

Management expects fourth-quarter revenue of roughly $1.05 billion. That would represent a further deceleration in revenue growth, to 19%. The company also guided for operating income and adjusted per-share profits of approximately $362 million and $1.07.

Multiple investment firms cut their price targets for Zoom's stock following its third-quarter earnings release and Q4 guidance. For one, Evercore ISI analyst Peter Levine reduced his share price forecast from $255 to $235 on concerns that Zoom's growth investments will weigh on its profit margins in the coming year. For another, Deutsche Bank analyst Matthew Nikam slashed his stock price estimate from $350 to $280, citing similar concerns.

"While we're positive on Zoom's strategic initiatives and investments in key growth areas, we find it tougher to like a stock with more sharply decelerating growth and incremental pressure on profitability," Nikam said. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Zoom shares plunged on Tuesday appeared first on The Motley Fool Australia.

Stock markets have turned volatile during the Thanksgiving holiday week, and that's created a rift on Wall Street. Although some major benchmarks are holding up well, the Nasdaq Composite (NASDAQINDEX: ^IXIC) has been down fairly sharply for two days in a row. Just before noon ET on Tuesday, the Nasdaq was down more than 1%, bringing its two-day drop to more than 350 points.

Looking more closely within the Nasdaq, many of the up-and-coming high-growth companies that have performed so well over the past couple of years are coming under substantial pressure, with outsized declines that seem out of proportion to any fundamental news. Yet investors in those stocks have seen firsthand just how volatile they can be in producing massive returns, so it's only natural that the inevitable pullbacks these stocks experience will also be gut-wrenching in their magnitude.

Yet it's also human nature to wonder if perhaps the bull market in these high-growth Nasdaq stocks might finally have come to an end.

A tough day for big growth

Many promising companies on the Nasdaq saw their shares hit an air pocket Tuesday. Monday afternoon's earnings results from Zoom Video Communications (NASDAQ: ZM) sent that stock down 18%, falling below the $200 per-share mark for the first time since the first half of 2020. Zoom shares are now off more than 60% from their all-time highs.

Even without news directly affecting companies, many of Zoom's high-growth peers took considerable hits, as well. Among them:

• Cybersecurity-specialist CrowdStrike Holdings (NASDAQ: CRWD) was down more than 5% Tuesday morning, bringing its losses over the past month to nearly 20%.
• Fintech-disruptor Upstart Holdings (NASDAQ: UPST) was down about 8%, sending its stock down 43% since late October.
• Delivery-specialist DoorDash (NYSE: DASH) gave up 9%, giving back all of its gains from the past couple of weeks and then some.
• Interactive fitness company Peloton Interactive (NASDAQ: PTON) fell another 6%, hitting a new 18-month low, down more than 75% from its highest levels less than a year ago.

Even some stocks that have held up well until now found themselves on the list of losers, including cloud-specialist DigitalOcean Holdings (NYSE: DOCN) falling 6% and Datadog (NASDAQ: DDOG) moving lower by 3%.

Why it's premature to call the end of the bull market

The challenge in investing in high-growth stocks is that investors always face difficulties deciding when a bull market has come to an end. When a stock generates 100%, 200%, or even 500% returns in a short period of time, even a pullback of 30%, 40%, or 50% can represent merely a correction in a longer-term upward trajectory. Selling out after those pullbacks because you think greater declines are coming has often proved to be the worst possible move you could make.

Moreover, the current level of volatility in high-growth stocks should not take anyone by surprise. By their nature, high-growth stocks are more susceptible to big market swings because most of their potential is in the future and therefore subject to greater uncertainty. This can lead to painful losses, but it's also the source of the outsized gains seen over the past 18 months for many of these stocks.

Focus on fundamentals

The smart move for long-term investors is to keep your eyes squarely on the business prospects for the companies whose stock you own. Some companies do see fundamental challenges that change the investing proposition and make them less attractive. In that case, considering a sale can be the right move.

More often than not, though, share-price moves are noise with little relation to the fundamental factors that make them promising businesses. The more you can tune out distractions and stay focused on business success, the more likely it is that you'll boost your long-term investment performance. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is the bull market in high-growth Nasdaq stocks over? appeared first on The Motley Fool Australia.

CommSec is one of the most popular brokers in the country. As such, this information gives us a useful insight into the US shares ASX investors are currently finding interesting.

So here are the top 10 US shares from CommSec last week. This week's data covers 30 August to September 3.

Tesla back on top

1. Tesla Inc (NASDAQ: TSLA) – representing 3.2% of total trades with a 57%/43% buy-to-sell ratio.
2. Alibaba Group Holding Ltd (NYSE: BABA) – representing 2.8% of total trades with an 84%/16% buy-to-sell ratio.
3. Apple Inc (NASDAQ: AAPL) – representing 2.5% of total trades with a 71%/29 buy-to-sell ratio.
4. GameStop Corp (NYSE: GME) – representing 2.2% of total trades with an 82%/18% buy-to-sell ratio.
5. Microsoft Corporation (NASDAQ: MSFT) – representing 1.4% of total trades with an 85%/15% buy-to-sell ratio.
6. NVIDIA Corporation (NASDAQ: NVDA)
7. Zoom Video Communications Inc (NASDAQ: ZM)
8. Alphabet Inc Class C (NASDAQ: GOOG)
9. Amazon.com, Inc. (NASDAQ: AMZN)
10. Lucid Group Inc (NASDAQ: LCID)

What can we learn from these trades?

Last week, we discussed the emergence of Chinese e-commerce giant Alibaba into the top spot on this list. Well, this week, Alibaba is still popular, but it's the Elon Musk-headed electric battery and vehicle manufacturer Tesla that takes out the top spot. Although saying that, investors appear pretty divided on what to do with their Tesla shares, seeing as the buy/sell ratio was at 57%/43%.

Tesla has been climbing in recent weeks, going from around US$665 on 17 August to US$753.87 as of last night (up 13.2%). Perhaps some investors are taking some profits off the table here.

But Alibaba is still in the number 2 spot this week and has a far more enthusiastic buy/sell ratio at 84%/16%. The Alibaba share price has continued to fall in recent weeks after a disappointing year in 2021 so far. The company hit a new 52-week low around a fortnight ago, so this might have tempted some bargain hunters to come out of the woodwork.

In other news, we still see sustained demand for the big US tech blue chips like Apple, Microsoft, Amazon, and Alphabet.

Zoom is an interesting addition though. This company has also taken a hit in recent weeks and is down more than 15% since last Monday (30 August). Clearly, we also see some bargain hunting going on here, judging by Zoom's 72%/28% buy/sell ratio.

And finally, we still see an appetite for the 'meme stocks' like GameStop and Lucid Group. Some 82% of trades were buys with GameStop, so there must still be some appetite for the kind of 'pops' this company has now become known for.

The post Here were the most popular US shares for ASX investors last week appeared first on The Motley Fool Australia.

According to some estimates, developed nations embraced more than 3 years' worth of technological advances in the latter half of 2020 alone.

One of COVID-19's biggest impacts was the mass closure of shared office space. This saw millions of workers eschew their former daily commutes and set up shop from home.

The work from home trend, in fact, grew so quickly and prevalent that it gained its own acronym, 'WFH'.

For investors, this rapid sea change in the way people worked (along with shopped and socialised) presented a unique opportunity to pick up technology shares that could help people through the transition.

We look at 5 of those shares, and their potential outlook, below.

Three tech shares connecting workers during COVID-19 restrictions

Employees of all levels accustomed to chatting face to face and signing documents in person found those basic activities banned following COVID-19 office closures.

To keep their businesses running and staff productive, management had little choice but to turn to technology. While many tech shares have done well since the onset of the pandemic, some have done better than others.

Josh Gilbert, market analyst at global online investment platform eToro, told The Motley Fool that, "Companies that have been able to help businesses run smoothly from home have benefited as they've seen their customer bases swell."

He points to Atlassian Corporation PLC (NASDAQ: TEAM), Zoom Video Communications Inc (NASDAQ: ZM), and Docusign Inc (NASDAQ: DOCU) as three companies "which have explicitly benefited from the work from home (WFH) lifestyle".

Gilbert said, "Zoom's share price grew by around 400% last year, as most companies around the world moved to remote working and turned to online video conferencing to solve their communication issues".

Then there's Australian software company Atlassian, "that builds collaboration and remote working tools to help teams connect and increase productivity". Atlassian's share price is up 127% in the last year.

Docusign's software, among other things, enables organisations to manage electronic agreements in the Cloud with eSignatures. Docusign's share price gained around 200% in 2020.

Two tech shares protecting WFH data

The WFH shift driven by COVID-19 didn't just require better ways to communicate and exchange documents remotely. It also meant helping secure data that was now held on servers outside the head office.

As Gilbert told The Motley Fool, "An area most investors have overlooked is cybersecurity. With more staff than ever working outside of the office, internal cybersecurity procedures are being prioritised."

He said Crowdstrike Holdings Inc (NASDAQ: CRWD) "the popular cybersecurity firm, set a record number of new customers in Q2 2021 at 1,660, with 81% growth year-over-year. Shares are also up 120% in the last year."

Then there's newly listed cybersecurity share SentinelOne Inc (NYSE: S), which went public in June.

According to Gilbert:

SentinelOne has already seen its share price jump around 60% in just a few months. In April 2021, Sentinel announced it had 4,700 customers, which grew by 74% from a year earlier. These numbers show a clear indication that businesses are spending more cash to protect their systems internally.

What's next for these COVID-19 outperformers?

With COVID-19 having helped drive these tech stocks' huge share price gains, forward looking investors are wondering how they'll fare once the impacts of the pandemic begin to fade.

Gilbert acknowledges that, "The stocks that have benefited the most, such as Zoom, will see a natural slow down when businesses begin to return to offices."

But he doesn't anticipate workers will simply revert to the way things were in 2019:

It's anticipated that the WFH lifestyle isn't likely to completely disappear. Businesses have learnt that employees can work successfully at home, so they are less likely to be sending staff on worldwide or national trips, unless completely necessary.

Gilbert adds, "Fundamentally, stocks such as Zoom and DocuSign have built great bases, and we can expect M&A activity from both businesses and further innovation from their product lines moving forward."

The post COVID-19 saw these 5 international tech shares boom…now what? appeared first on The Motley Fool Australia.

In a press release today, Facebook unveiled its answer to Zoom, known as 'Horizon Workroom', or more simply as 'Workrooms' — the VR experience aims to be a more immersive environment for people who work together to communicate and collaborate.

Remote working of the future

While COVID-19 has resulted in a massive influx of remote working out of necessity, some people still argue that real collaboration can't occur outside of the workplace. Video teleconferencing company, Zoom Video Communications Inc (NASDAQ: ZM), would argue otherwise.

Communicating with colleagues is critical in just about every occupation. Thanks to the modern internet, much of the population has been able to continue to interact with others while being homebound. However, as Facebook points out — working remotely can feel isolating, and creative collaborating can feel stifled — queue Workrooms.

Facebook's Workrooms utilises the company's Oculus Quest 2 VR headset to bring colleagues together virtually. According to the company, Workrooms is "designed to improve your team's ability to collaborate, communicate, and connect remotely, through the power of VR".

In stark contrast to Zoom's 2D interaction, Workrooms allows users to enter a completely virtual space with multiple people. From there, people can share documents on a virtual screen, take notes on a virtual keyboard, and wave their virtual hands in the air — pretty cool huh.

Apparently, Facebook employees have been using their own creation for months to conduct their own virtual meetings.

Commenting on the innovation, CEO and Founder Mark Zuckerberg said:

These kinds of experiences, where you can actually feel present with other people, are I think a much richer way to interact than the types of social apps we've been able to build on phones or computers.

The product announcement follows discussions of how Facebook wants to push into the next frontier of the internet… the metaverse. Perhaps Workrooms is the first public piece of that ambitious puzzle.

Facebook share price compared to Zoom

Surprisingly, despite a continuation of lockdowns and restrictions across some geographies, the Zoom share price has underperformed even the S&P/ASX 200 Index (ASX: XJO). Specifically, the video conferencing company's shares have gained 14.3% in the past year.

In comparison, the Facebook share price has outperformed the Aussie benchmark index. Even more impressively, the social media company has inched out an outperformance of the S&P 500, which returned 30.1% over the past year.

The post Facebook (NASDAQ:FB) share price in focus as it reveals its answer to Zoom appeared first on The Motley Fool Australia.

Image source: Getty Images.

1. Zoom takes pole position in a new cloud communications competition

2. Video conferencing is a new standard feature to build around

3. Zoom gets to keep its cash hoard

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 Huge Implications of Zoom's $14.7 Billion Bid for Five9 appeared first on The Motley Fool Australia.

Not a surprise

About that price tag ...

Looking forward

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Should investors welcome Zoom's $14.7 billion deal? appeared first on The Motley Fool Australia.

What happened

So what

Image source: Zoom Video Communications.

Now what

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Zoom Video Communications Was Down on Monday appeared first on The Motley Fool Australia.

Image source: Zoom Video Communications.

Zoom makes the call for growth

Zoom keeps its cash

Hoping for the best

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post What the Zoom-Five9 Deal Says About the Nasdaq's Future appeared first on The Motley Fool Australia.

It reminded everyone that investing, even for those who do it for a living, never has a 100% win rate.

"To be perfectly honest, we target getting 60% of our decisions correct," Sage Capital portfolio manager Sean Fenton told The Motley Fool.

"If you don't do the hard accounting and actually track your investment decisions and work out your wins and losses, people tend to overestimate their skill. But we do do that — and if we can get 60% of our investment decisions right, it means we're absolutely knocking it out of the park."

So to counter that friend who brags about his new-found riches, here are stories of 6 more ASX shares that fund managers regretted:

Temple & Webster Group Ltd (ASX: TPW)

Online retailers did very well out of the first wave of the COVID-19 pandemic. 

People around the world stayed bunkered down and ordered homewares remotely to make their lives more comfortable.

Sage Capital portfolio manager Kelli Meagher regretted not buying into Temple & Webster, with its shares as low as $2.05 last year. They are trading for $10.16 early Thursday afternoon.

"I regret how conservative I was with my valuation discipline, I suppose, when it came to pure online retail stocks when they first started moving last year," she told Ask A Fund Manager.

"And they've gone up, doubled and tripled, I saw that I'd missed the opportunity – and they just kept going. So there's definitely some remorse from sitting on the sidelines there."

Challenger Ltd (ASX: CGF)

Investment company Challenger has frustrated many shareholders over the last few years.

Trading at $5.34 Thursday afternoon, the stock is more than 38% down on 5 years ago.

U Ethical portfolio manager Jon Fernie admitted defeat.

"The one stock retreat where we got the timing wrong was investing into Challenger several years ago when we thought that interest rates were going to move higher. We also thought that there were going to be regulatory changes that would drive underlying demand for annuities," he told Ask A Fund Manager. 

"Unfortunately, both those things didn't happen. And that led to us ultimately exiting the stock at a lower level. So that was probably one investment decision that we regretted."

Nike Inc (NYSE: NKE) and Lululemon Athletica Inc (NASDAQ: LULU)

For Forager research analyst Chloe Stokes, she wished she was better prepared when markets nosedived in March 2020.

"We saw brilliant companies like Nike and Lululemon down more than 30% in a couple of days," she told Ask A Fund Manager.

"Those stocks would have been excellent investments at market prices, but because I never thought they were cheap enough to invest any time into, I didn't have a thesis ready."

Nike is up almost 30% in the past 12 months, while Lululemon shares have risen 19.2%.

The big lesson for Stokes was that investors, whether professional or amateur, need to have a 'hit list' ready for price dips.

"It might seem like a waste of time, but you never know when the opportunity could come along to own a high-quality business at a more than reasonable price," she said.

"I wouldn't want to miss out on owning some of my favourite businesses if the opportunity presents itself again."

Zoom Video Communications Inc (NASDAQ: ZM)

If ever there was a COVID beneficiary, the video conferencing company that became a verb is it.

Zoom shares have risen about 460% since the start of 2020 when no one was thinking twice about going into the office 5 days a week.

Spaceship portfolio manager Jason Sedawie regretted not getting a piece of that action.

"It's always what you don't buy that hurts you because they can be the potential multi-baggers," he told Ask A Fund Manager.

"Whenever I'm on a Zoom call or Google Meet, I just get reminded of that company."

The video tech provider surprised Sedawie in the way it rose above hot competition from deeper-pocketed rivals.

"We did know about it, but it wasn't something we were really excited about because everyone used Microsoft Teams, Google Hangouts," he said.

"They were a business service that schools and consumers just all of a sudden knew. So they went from 10 million daily meeting participants to 300 million a couple of months later. Just how they scaled and executed and pivoted – I just have a lot of respect."

Tripadvisor Inc (NASDAQ: TRIP)

Hyperion Asset Management lead portfolio manager Jason Orthman remembers buying Tripadvisor shares thinking the business could disrupt traditional booking engines.

"Our research didn't pick up how sticky consumer behaviour was and how strong the competitive offerings were," he told Ask A Fund Manager.

"It took us about 2 quarters to realise our research was incorrect, and we exited. And that saved our investors a lot of money. We lost money on that investment, but we didn't experience the significant downside that those that have held onto that business had."

Tripadvisor stocks have lost more than 34% over the past 5 years.

But there was a final twist to rub salt into the wound.

Stocks for Tripadvisor rival Booking Holdings Inc (NASDAQ: BKNG) have surged almost 83% in the last half-decade.

"We compounded that error, not only buying Tripadvisor, but selling out of Priceline, which is now called Booking Holdings."

The post 6 more shares that haunt fund managers appeared first on The Motley Fool Australia.

But with the dark shadow of inflation looming, which tech businesses are "safe" to return to and which ones should we avoid?

According to Montgomery Investments chief investment officer Roger Montgomery, now is the time to be very selective about where investors park their money.

"Investing in global stocks has been particularly rewarding during 2020 and the early part of 2021. The future, however, could be more challenging and more discernment will be required. This discernment will be no more necessary than required in the tech sector," he said on the company blog.

"The next big rotation could see these over-valued – often profitless – firms dumped in favour of long-duration quality tech businesses."

Short-term volatility is the forecast

Rising inflation changes the whole game, according to Montgomery.

While he believes the world will eventually return to the pre-COVID low inflation environment, the immediate future is not so rosy for tech.

"For the next few months there is every risk that both the leading tech companies and the profitless prosperity companies are put under some pressure," he said.

"Any forthcoming volatility may be greater for the super long-duration tech set where price and sales multiples are off the Richter scale."

Taking advantage of this volatility involves putting money into the right tech shares to reduce downside risk.

Tech giants' numbers are far superior to the speculators

Montgomery thought the COVID winners still have nonsensically high valuations.

"EV [enterprise value]-to-EBITDA sits at about 2500 times for Roku Inc (NASDAQ: ROKU) and 147 times [for] Zoom Video Communications Inc (NASDAQ: ZM)," he said.

"Meanwhile Roku, Docusign Inc (NASDAQ: DOCU) and Slack Technologies Inc (NYSE: WORK) generate negative returns-on-equity."

This is why the safe bet in a rising inflation world are the well-established giants.

"Contrast these multiples to the tech giants whose combination of growth and profitability could not have been imagined by capitalism even a decade ago," said Montgomery.

"Facebook's ROE sits at 25 per cent, Apple's is 82 per cent and Microsoft 43 per cent."

He added that the profitable mega-caps like that trio and Amazon.com Inc (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) have "incredible economics" and "scarcity" on their side.

The rotation away from momentum stocks has already well begun, even though these companies are merely seeing a slowdown in revenue growth.

"Witness, for example, the up-to-50% slides in Peloton Interactive Inc (NASDAQ: PTON) and Afterpay Ltd (ASX: APT), a decline of a third for Docusign and Zoom, along with slides in Appen Ltd (ASX: APX) (down 70%), WiseTech Global Ltd (ASC: WTC) and Xero Limited (ASX: XRO)," Montgomery said.

"We currently believe it is wise to tilt towards quality and away from momentum in the tech names."

Montgomery's worst fear is that inflation pokes up, and then the central banks allow it to go out of control.

"Recently, a well-connected friend told me Australia's [Reserve] Bank believes there's a 25% chance inflation could get away from them," he said.

"The idea that central banks could be 'behind-the-curve' is one markets are most nervous about."

The post The tech shares to buy now (and the ones to avoid): analyst appeared first on The Motley Fool Australia.

GDP figures released today show the economy grew 1.8% in the quarter and 1.1% over the year. In addition, the economy grew 0.8% above the December 2019 quarter. This represents the last full quarter before the coronavirus reached our shores. The growth figure for this period is greater than economists anticipated. A Reuters poll of experts predicted a smaller growth rate of 1.5%.

Australia's economy outpaces the world

Harley Dale, chief economist at CreditorWatch, says today's results are excellent news.

"Against the broader economic backdrop, you could call today's results a real boomer. If you think back to early June last year and how everyone feared GDP would fall off a cliff, this update is outstanding, particularly the trajectory of key commodity prices," Mr Dale said.

While Mr Dale was upbeat about today's news, he did say Australia still had "some way to go."

"The March 2021 quarter figures have the protective shield of government support protecting them to some degree."

"We'll find out more in the June quarter when most of that support has been taken away. Realistically, it's where we're at in 2021/22 that will count, and nobody knows a great deal about that right now," he added.

Australia is one of only five economies to be larger than it was pre-pandemic. That's according to Kristina Kolding of Deloitte Access Economics, who was quoted in Reuters.

Treasurer Josh Frydenberg was quick to brag about the news. He tweeted a chart showing Australia's economy had grown since the pandemic. The chart also demonstrated that every other nation of the G7's economy had shrunk.

AMP Capital Chief Economist, Shane Oliver, says the high levels of consumer confidence, jobs recovery, and excess savings are all positive signs for future consumption. If this is true, that would be good news for retail companies like JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN).

Mr Oliver also said private demand was the key to today's positive figures. However, he also stated that this may have been aided by government assistance, such as JobKeeper and HomeBuilder.

ASX 200 and the economy

While the ASX 200 and the economy are not perfectly related, they can move together during certain times, even if at different rates. Take for example the COVID sell-off of March last year. The Australian stock market tanked at the same time as the economy did, as business and consumers suffered alike.

Investors have seen an even greater return. The ASX 200 has grown 7.9% over the same time the economy has only increased 0.8%. As more Australians become vaccinated and the economy opens up more, future economic growth should be good news for diversified investors.

Of course, some companies can move independently of economic conditions. Locally listed Ansell Limited (ASX: ANN) and Zoom Video Communications Inc (NASDAQ: ZM) both boomed last year as the rest of the economy faltered. Companies can also fail as the economy rises.

The post ABS says Aussie economy is now bigger than before COVID appeared first on The Motley Fool Australia.

Munro Partners head of investment Nick Griffin said tech shares have been sold down heavily in the recent rotation to value stocks.

But just because the share price has dipped, this doesn't mean certain businesses won't keep growing earnings.

"Inflation is going to change the re-rating or the de-rating of Amazon.com Inc (NASDAQ: AMZN)," he told a Livewire video.

"Yes, it will change the price we pay, but it won't change the fact that Amazon's earnings will continue to grow in the future. And in the long run, we expect their share price to follow their earnings and ultimately deliver the returns that we're looking for."

Hello, Australia is the crystal ball for the rest of the world

Griffin is particularly surprised by how much the cloud commuting subsector has been sold off.

"It's one of the bigger areas in our fund today," he said.

"They don't look optically cheap, but on cash flow metrics, they actually are not as expensive as what people think."

A major reason for this investor reticence is a post-COVID prediction that northern nations have made — that we Australians already know is completely wrong.

"There's been this assumption — and it's very much coming from the northern hemisphere — that COVID's going to go away and we're all going to go back to work."

Griffin's US and European colleagues have told him cloud computing usage will wane because work-from-home infrastructure won't be in as high demand as last year.

"We can say, look, we're calling you from the future here. We're here in Australia, there's no COVID and no one's going back to work. Work-from-home is somewhat here to stay," he said.

"The digital transformation got accelerated by COVID — and there's no reason to think it will slow down just because COVID goes away."

This is why Griffin reckons there's currently a major stock-buying opportunity for "some of the big winners in the next decade".

"Because it's fairly clear that a lot of these software solutions we're using for it — whether it be Zoom Video Communications Inc (NASDAQ: ZM) or Docusign Inc (NASDAQ: DOCU) or Atlassian Corporation PLC (NASDAQ: TEAM) products are going to be with us for a long time."

One of the beneficiaries from the demand for work-from-home technology, Telstra Corporation Ltd (ASX: TLS), this week announced that it wouldn't force its own 26,000 employees to return to the office.

"There's an opportunity for employers to look forward and create a completely different vision of the workplace rather than trying to hold on to the past," Telstra executive Alex Badenoch told the Australian Financial Review.

"Every single one of our employees can have an element of choice about how they work, when they work and the kind of work they do."

The post Wake up world, this tech sector is the future: analyst appeared first on The Motley Fool Australia.

ARK is a funds management business over in the United States. Ms Wood is its founder, CEO and chief investment officer. ARK has gained its fame through its suite of exchange-traded funds (ETFs), which specialise in high-growth, future-facing and disruptive companies, usually in the tech space. Ms Wood first rose to fame with her uber-bullish views on some prominent tech shares.

Wood drew a lot of eyeballs a couple of years ago with her unabashedly optimistic views on the electric car and vehicle manufacturer Tesla Inc (NASDAQ: TSLA). Back in May 2019, Cathie Wood surprised even the more bullish investors of Tesla when she spruiked a US$5,905 share price target for the company. At the time, Tesla was a US$40 share (adjusted for last year's stock split). It was also just before Tesla went on its millionaire-minting run. Over the following year or two, Tesla was to shoot up more than 1,100% in value. The fact that Ms Wood was one of the first investors to come out of the gates with such a bullish price target for Tesla earned her and Ark a lot of respect in hindsight.

Growth at scale

But since the days of calling Tesla's success, Cathie Wood and ARK also put some pretty convincing runs on the board. Its flagship fund – the ARK Innovation ETF (NYSE: ARKK) – returned an impressive near-40% in 2019, and almost 150% in 2020. ARK Innovation is a fund that incorporates the 'best ARK picks' from its other, more sector-specific ETFs. Between 1 January 2021 and 12 February, it added another ~25% or so. That's enough performance to catch any investors' eye. Other ARK ETFs performed similarly well, if not better, over these time frames. 

But since February 2021, things haven't been entirely 'coming up Milhouse' for ARK funds. The ARKK ETF has corrected sharply since February when it reached its peak of US$159.70 a unit. On today's pricing, ARKK units are back to US$112.28, giving up more than 28% off of that high.

So is ARK a spent force? Let's take a deeper dive.

What's in an ARK ETF?

Here are the top holdings, and their weightings, in the flagship ARKK ETF, as of 27 May:

As you can see, the fund is heavily weighted to high-growth tech shares. We have Tesla (naturally taking out a large chunk at the top there. But we also have companies like Roku, Square, Shopify, Spotify, Zoom and Coinbase.

These companies are all very similar in nature. They are disruptive, tech-based companies that have long growth runways, and a lot of future potential. But they are also not too profitable today, and still very much in 'growth phase'. These companies are at the stage of their lives where they are prioritising revenue growth over profitability. That's why most of them don't even have price-to-earnings (P/E) ratios yet. Or if they do, they are normally in the triple-digits. Take Tesla. Its P/E ratio is currently sitting at 635.7.

What about some other ETFs?

We see similar patterns in some of ARK's other popular ETFs.

Here are the top ten holdings for the ARK Fintech Innovation ETF (NYSE: ARKF) fund:

And here is what the ARK Next Generation Internet ETF (NYSE: ARKW) fund holds:

Again, very similar businesses – high growth, disruptive, priced for future profitability rather than the money they make today.

So why have ARK funds had a bad few months?

And now we can look at the main problem that these funds face. They tend to do well, really well, when the market is running hot, and growth companies are 'in vogue'. By definition, growth companies tend to outperform the broader markets during a bull run and underperform during a bear market. 2019, and post-COVID 2020 were decidedly the former.

But why the underperformance since February 2020? After all, the US S&P 500 Index (INDEXSP: .INX) has gone and pushed to more record highs since 12 February. Most recently on 7 May.

Well, another factor at play has been fears of inflation and rising bond yields, which have spiked in the months since 12 February. According to CNBC, the US 10-year Treasury yield was well under 1% at the start of 2021 and was around 1.18% on 12 February. This yield reached a high of roughly 1.75% in late March and still stands at 1.61% today.

Rising bond yields typically turn sentiment against companies who are being priced on future earnings, rather than what they offer today. In other words, most of the stocks that ARK funds hold. We saw similar gyrations in our own ASX tech sector between February and May.

What does the future hold for ARK?

The big corrections in the value of Ark funds over the past few months might have dented some of the optimism that many of its investors would have been feeling in the months and years prior. But if the market was once again to fall back in love with the kinds of future-facing tech companies that ARK invest in, it is conceivable that we will see ARK funds back at all-time highs. Time will only tell. But Cathie Wood and ARK are probably not going away anytime soon regardless – as barometers of high-octane growth stock investing if nothing else.

The post An ASX guide to Cathie Wood and ARK Invest ETFs appeared first on The Motley Fool Australia.

But some of the ASX's more prominent tech shares are faring far worse. Afterpay Ltd (ASX: APT) is down a nasty 5% to $8.68 a share, a level not seen since October last year. The buy now, pay later (BNPL) giant has now lost roughly half of its market capitalisation since peaking at $160 back in early February. Xero Limited (ASX: XRO) has also shed around 7.4% and is going for $124.96 right now. And Nuix Ltd (ASX: NXL) continues to explore new lows today. Now Xero's move isn't being helped by the company's full-year results which were released to investors before market open this morning. Despite an 18% increase in revenue and a 20% increase in subscribers, it seems investors weren't too impressed that these numbers weren't as high as some analysts were expecting.

But that can't explain the malaise across the entire tech space today. So what gives?

Well, the market's formerly dormant fears over inflation and interest rate hikes appear to be reawakening with a passion. Until the start of 2021, investors had shown a penchant for high-growth, midcap shares in the tech space. Some of these shares, like Afterpay and Xero, were some of the best ASX performers last year. Aside from the initial onset of the pandemic of course. But these companies which led the ASX share market recovery last year appear to be the first shares that investors are looking to jettison. Why? Well, it might all come back to the 'inflation' thing.

America first: US leads tech share sell-off

This is more of a concern over in the United States right now than here. The US markets are coming down from a government spending high. After the passage of the mammoth US$1.9 trillion COVID stimulus bill a couple of months ago, the new Biden administration has now proposed a number of additional spending plans. These involve infrastructure spending, climate change action, and increasing assistance to state and local governments.

All of these plans have sparked concerns over inflation. And these fears are ramping up. According to a report in the Australian Financial Review (AFR) today, consumer prices in the US increased in April at the highest pace since 2009 at 0.9% for the month. This reportedly exceeded the highest estimations that economists had been predicting. Annualised, it points to a 4.2% increase in prices, the highest since 2008.

These exexpectedly strong figures have pushed up government bond yields. According to CNBC, the 10-year US treasury bill was yielding around 1.56% a week ago. It's at 1.68% today. This indicated the market is pricing in future inflation – and interest rate hikes.

And that's bad news for tech companies. The US has seen mid-cap tech shares smashed over the past week or so. Stocks like Zoom Video Communications Inc (NASDAQ: ZM), Tesla Inc (NASDAQ: TSLA) and Coinbase Global Inc (NASDAQ: COIN) have all sold off heavily. The shenanigans going on with Elon Musk and Bitcoin (CRYPTO: BTC) that my Fool colleague Brooke Cooper covered earlier today probably isn't helping either. And this sentiment appears to be spilling over into the ASX tech space. That's despite the Australian economy not facing the same kinds of inflationary concerns right now. But such is the way of these things.

The post Why are ASX tech shares like Afterpay (ASX:APT) crashing today? appeared first on The Motley Fool Australia.

Technology, specifically, led the way in massive market gains in 2020 after the March COVID-19 trough. The S&P ASX All Technology Index (ASX: XTX) gained a whopping 125% from 20 March to the end of the year.

But this year has been a different story, with growth and tech shares falling out of favour.

The ASX All Tech index remains flat, increasing just 0.9% since New Year's Day.

The rotation to value stocks has been triggered by a fear that inflation would rise as the world recovers from the pandemic. When inflation rises, interest rates could rise. 

And that's bad news for high-growth stocks, according to Platinum Asset Management chief executive Andrew Clifford.

"Many high-growth stocks have seen their share prices fall considerably from their recent highs, with bellwether growth stocks such as Tesla Inc (NASDAQ: TSLA) down 27% from its highs, Zoom Video Communications Inc (NASDAQ: ZM) down 45%, and Afterpay Ltd (ASX: APT) down 35%," he said in an update to investors.

"Theoretically, rising interest rates have a much greater impact on the valuation of high-growth companies than their more pedestrian counterparts. As such, it is not surprising to see these stocks most impacted by recent moves in bond yields and concerns about inflation."

Is the slowdown in growth shares temporary or chronic?

Multiple experts have predicted that the aversion to growth stocks is temporary, and the market would soon return to the 2020 darlings.

T Rowe Price Group Inc (NASDAQ: TROW)'s investment committee for its Australian arm last month already started shifting its allocation from value to growth.

Nucleus Wealth head of investments Damien Klassen also stated last month that pre-COVID deflationary forces would reassert themselves soon.

Clifford disagrees. He has grave fears for growth stocks that so many people ploughed their money into last year.

"For many (but not all) of the favourites of 2020, we would not be surprised to see them fall another 50% to 90% before the bear market in these stocks is over," he said.

"If our concerns regarding long-term interest rates come to fruition, this will be a dangerous place to be invested."

His bearish view was based on his forecast that interest rate rises would be irresistible.

"It is hard to see how we can avoid a strong cyclical rise in inflation," he told investors.

"It is an environment where there is likely to be ongoing upward pressure on long-term interest rates."

And history could serve as an example.

"We only need to look to the end of the tech bubble in 2000 to 2001 for an indication of how this may play out," Clifford said.

"The much-loved 'new world' tech stocks collapsed in a savage bear market, while the out-of-favour 'old world' stocks rallied strongly."

The post High-flying ASX tech shares could fall another 90%: fundie appeared first on The Motley Fool Australia.