Out Fox The $treet

Zoom Video is priced for unsustainable trends plus the video conferencing tools isn't ready for privacy issues. The stock is worth double and triple a similar group of companies benefiting from the work-from-home economy. The stock trades at an unsustainable 40x FY21 sales. As the market has collapsed this year due to the coronavirus outbreak,  Zoom Video Communications  ( ZM ) has soared. The company benefits from the virtual economy and reportedly has seen mobile  active users up over 150%  in March. The problem here is that the stock is priced for a virtual only world where users never return to normal trends. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Pinterest ended the year down over 20% from their initial trading price of $23.75. A lot of high profile 2019 IPOs flopped. The social media stock has the most promising valuation and path to profits. My target is still $15 with a forward EV/S multiple of 5.3x. A broken IPO can be one of the best ways to buy a great company at a reasonable price. With 2019 being a year where prominent IPOs failed to live up to expectations,  Recode   highlighted  the stocks that struggled in 2019 and unfortunately most of the stocks on the list aren't appealing after their busted IPO due to weak financials. One stock stands out with my  negative investment  thesis about to turn bullish. Read the full article on Seeking Alpha.  Disclosure: Long TWTR. Please review the disclaimer page for more details. 

Stocks to watch on Wednesday: Slack (WORK) - report after report continues to suggest Microsoft (MSFT ) has become aggressive in pushing Office clients into their competitor to Slack. Teams now has far more users and Slack is facing decelerating growth. My price target remains $17.50 and the chart suggests the risk remains to the downside. FedEx (FDX) - the package delivery company remains a disaster. The stock appears to have more downside risk after another quarter of missing analyst estimates. FedEx is an interesting stock to watch as the company inevitably hits bottom as Europe improves. Disclosure: No position. Please review the disclaimer page for more details. 

Slack rallied despite confirmation of decelerating revenue trends. Microsoft appears to be stealing users at the margin. A valuation of 8x FY22 revenues places the stock at only $17.50. Despite  disappointing guidance ,  Slack Technologies  ( WORK ) rallied back on the day following earnings. The stock still trades near the lows following a hot IPO earlier this year as the market originally priced the collaboration service at irrational levels. The bounce places the stock in a position to rally off the lows, but the valuation remains far too rich to chase Slack here as my  long-term investment thesis  remains negative. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

After Slack (WORK) initially traded down following FQ3 results, the stock made an impressive turnaround on Thursday. Slack appears ready to rally after hit higher lows and closing at the highs. The stock valuation isn't that impressive here. My valuation places the stock at $17.50 at 8x FY22 revenue estimates. Paying far more and chasing this stock just doesn't appear wise. Disclosure: No position. Please review the disclaimer page for more details. 

Stocks to watch on Tuesday: Aurora Cannabis (ACB) - the stock is headed towards $2 and fast. The cannabis stock has plenty of support around this level, but investors should be careful trying to catch a falling knife.  The stock valuation reaches $2.4 billion, but a lot depends on the amount of dilutive financing needed to fund ongoing operating losses. Kohl's (KSS) - the department store retailer had a mixed report with decent revenues while cutting EPS estimates due to extra costs. The dividend yield is a ridiculous 5.6% after this dip. The stock is now testing the lows from the summer sell off. Slack (WORK) - my previous research questioned valued above $17.50 and the news about top competitor Microsoft (MSFT) adding millions of new Team subs is highly concerning. Previous research: Slack: Wheels Just Fell Off Disclosure: Long KSS. Please read the disclaimer page for more details. 

Slack fell hard due to revenue growth expectations failing to meet expectations. The company is facing a period of decelerating revenue growth that always hits high multiple stocks very hard. A valuation of 8x FY22 revenues places the stock at only $17.50. By all accounts,  Slack Technologies  ( WORK ) reported a  solid FQ2  for the first quarterly report following their hot IPO back in June. The stock was already down substantially from the highs above $40, but the IPO rally was so outrageous that investors should expect the IPO pricing at $26 is broken. My  original research  was bearish on the stock following the hot IPO, and the view hasn't changed much now. Read the full article on Seeking Alpha.  More commentary: Out Fox The $treet - September 5, 2019  Disclosure: No position. Please review the disclaimer page for more details.