What Happened?

A number of stocks fell in the afternoon session after President Trump criticized the Federal Reserve's approach to interest rate cuts, warning that the pace was slow and could hinder economic growth. Trump's comments added pressure to an already sensitive market, raising concerns about political interference in monetary policy. 

Meanwhile, Fed Chair Jerome Powell maintained a cautious stance the previous week, highlighting the difficulty of balancing the dual mandate of steady employment and price stability amid the escalating trade tension. Investor sentiment was further dampened by the absence of constructive progress in trade negotiations, especially US-China relations which took a turn for the worse in the previous week. 

Overall, the outlook seemed more unclear heading into the first quarter 2025 earnings season, as a combination of hard to predict monetary policy and unresolved trade tensions weighed on business confidence.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, following stocks were impacted:

• Content Delivery company Cloudflare (NYSE: NET) fell 5.4%. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free.
• Identity Management company Okta (NASDAQ: OKTA) fell 5.1%. Is now the time to buy Okta? Access our full analysis report here, it’s free.
• Advertising Software company AppLovin (NASDAQ: APP) fell 5.9%. Is now the time to buy AppLovin? Access our full analysis report here, it’s free.
• Sales Software company Freshworks (NASDAQ: FRSH) fell 5.2%. Is now the time to buy Freshworks? Access our full analysis report here, it’s free.
• Advertising Software company Zeta (NYSE: ZETA) fell 5.9%. Is now the time to buy Zeta? Access our full analysis report here, it’s free.

Zooming In On Zeta (ZETA)

Zeta’s shares are extremely volatile and have had 52 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 12 months ago when the stock gained 21.8% on the news that the company reported first-quarter 2024 results that blew past analysts' billings, adjusted EBITDA, and free cash flow expectations. Notably, the company highlighted strengths in the number of scaled-up customers (from the $100,000 to $1 million cohort), leading to strong ARPU (average revenue per user) growth. 

Looking ahead, next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its new large contract wins slowed. Overall, we think this was a strong quarter that should satisfy shareholders.

Zeta is down 42.2% since the beginning of the year, and at $10.84 per share, it is trading 70.5% below its 52-week high of $36.74 from November 2024. Investors who bought $1,000 worth of Zeta’s shares at the IPO in June 2021 would now be looking at an investment worth $1,219.

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