Zoom Communications Q4 Earnings Could Help Boost “TAWK” ETF

In Thursday’s trading session, Zoom Communications was the proverbial comeback kid after it reversed losses to gain more than 9% after the company reported better-than-expected earnings in the fourth quarter. If the rest of the communications sector can follow even amid the coronavirus concerns, it can help boost those sector-focused ETFs.

Per a MarketWatch report, the company “reported net income of $15.3 million, or 5 cents a share, for the quarter, compared with net income of $1.2 million, or 1 cent a share, in the year-ago fourth quarter. Adjusted per-share earnings came to 15 cents, ahead of the 7 cents FactSet consensus. Revenue soared 78% to $188.3 million from $105.8 million a year ago. Sales for all of 2019 came to $622.7 million, up 88% year-over-year. Analysts surveyed by FactSet had expected sales of $176.5 million.”

“It was a strong finish to our fiscal year,” CEO Yuan said following the quarterly results.

Wall Street analysts liked the future prospects for Zoom, rewarding the company with upgraded ratings.

“The global coronavirus epidemic will undoubtedly drive awareness and adoption of the company’s video conferencing platform, and we expect this environment to further enable the company to post industry-leading growth rates,” Stifel analysts led by Tom Roderick wrote.

Zoom keeps zooming to the upside thus far in 2020:

ZM Chart

ZM data by YCharts

Safe Haven Communications Sector

Amid the coronavirus outbreak, telecommunications have been on the rise in order to decrease the chances of virus transmission. This can only help to fuel the communications sector, which could be used as a defensive maneuver as well.

Dave Nadig, chief investment officer and director of research at ETF Database, suggested the communications sector last month during an interview with CNBC on the “ETF Edge” show. Nadig suggests investors give Communication Services Select Sector SPDR Fund (XLC) a peep, but for traders looking for a fund with some 3x juice, then the Direxion Daily Communication Services Index Bull 3X Shares (NYSEARCA: TAWK) will do the trick.

TAWK seeks daily investment results equal to 300 percent of the daily performance of the Communication Services Select Sector Index. The index includes domestic companies from the communication services sector, which includes the following industries: diversified telecommunications services, wireless communication services, media, entertainment, and etc.

With the transparency and liquidity of an ETF wrapper that incorporates multiple hedge fund strategies, funds like TAWK opens up the arena to all types of investors irrespective of net worth. In addition, the communications sector can be used as a defensive maneuver amid the coronavirus outbreak, making TAWK a good option that’s not relegated to just leverage-hungry traders.

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