Stocks Tumble on Renewed Fears of a Fed Rate Hike

ZI: The Ultimate Guide to Zero Interest Investing - Book CoverThe stock market slid on Wednesday amidst rising concerns on Federal Reserve’s rate hiking campaign. Investors were worried that the central bank may not cut interest rates anytime soon.

Overall, S&P 500 plunged 0.7% to 4,465, while NASDAQ fell 1.1% to 13,872.

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Here is the one-year chart of ZoomInfo (ZI) as of August 23, 2023, when the stock was at $18.

ZoomInfo’s cloud-based platform provides comprehensive sales and marketing information on organizations and professionals that work within them. It has data on over 100 million companies, including technologies used and decision maker contact information, and over 150 million professionals worldwide.

ZoomInfo stock plunged to an All-Time Low of $17 last quarter, while the company’s earnings continue to decelerate with estimates for future quarters showing no profit growth. Profit grew 24% year-over-year, compared to 33% during 2QtrsAgo, 44% 3QtrsAgo, and 85% 4QtrsAgo. Next quarter’s estimates range from 0% to -4% growth in the next four quarters. Revenue grew 16%, also continuing a downward trend.

The company’s troubles stem from software customers who are renewing less than expected as software companies reduce spending while they navigate a lower growth environment. This is a big issue for ZoomInfo as their customers sit disproportionately in the software vertical. One customer reduced its sales team, and cut ZoomInfo license holders from 100 to 20. The company is also seeing elevated write-offs from its smaller customers.

ZI used to be in our Aggressive Growth Portfolio, but David Sharek, Founder of School of Hard Stocks, sold the stock due to the weak environment for software. He would like to buy ZI for the Growth Portfolio when economic conditions improve.

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