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June 3, 2019, 9:10 a.m. EDT

Beyond Meat, Zoom Video and PagerDuty are about to try to justify booming post-IPO valuations

Earnings Watch: After Uber and Lyft failed to resuscitate their stocks in first reports, here come some Wall Street freshman with better early report cards

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By Jeremy C. Owens, MarketWatch , Emily Bary


Bloomberg News
Beyond Meat shares have gained more than 300% at times since the company went public earlier this month.

Lyft Inc. and Uber Technologies Inc. haven’t given 2019 initial public offerings a good reputation, but investors are about to hear from a few companies that have.

Both Lyft /zigman2/quotes/208999293/composite LYFT +1.27%  and Uber /zigman2/quotes/211348248/composite UBER +0.21%  have already reported results that failed to change Wall Street’s gloomy view of the ride-hailing stocks, which are still trading below their IPO prices. Coming up in the week ahead are reports from a trio of companies that have won favor—in a big way—since making their public debuts: Beyond Meat Inc. /zigman2/quotes/211617595/composite BYND +0.41%  , Zoom Video Communications Inc. /zigman2/quotes/211319643/composite ZM -4.55%  and PagerDuty Inc. /zigman2/quotes/210571191/composite PD -5.83%  are all expected to report quarterly earnings Thursday afternoon.

For more: Uber thinks price war with Lyft may be ending, and both stocks are headed higher

Beyond Meat surprised the investment world when it went public in early May, as shares more than doubled in their first day of trading and proceeded to head ever higher, recently trading up 300%. The company sees big potential for plant-based meat alternatives and its executives will be pressed Thursday on upcoming partnerships, including rumors of a potential tie with McDonald’s Corp. after rival Impossible Foods linked up with Burger King.

It will be worth watching whether Beyond Meat’s revenue is growing at a fast enough rate to justify the company’s fresh $6 billion valuation. Beyond Meat grew the top line by 170% last year, and analysts surveyed by FactSet expect that the company increased first-quarter revenue by more than 200%, to $39 million, from a year earlier. Beyond Meat said in its prospectus that it expected to post revenue of $38 million to $40 million for the quarter.

The forecast will be key, but even sticking to its previous outlook may not be enough.

See also: Beyond Meat CEO wants to make traditional protein from animals ‘obsolete’

”There is a widely held view that Beyond’s FY19-21 guidance is too conservative,” Jefferies analysts wrote in a preview. “Given the high bar, we suspect simply reaffirming Beyond’s outlook would be met with disappointment by the market.”

Zoom Video has also more than doubled from its IPO price, becoming the most expensive U.S. tech stock on a price-to-sales ratio and spooking analysts who think it may be overpriced. Unlike many of its young peers in the tech space, the videoconferencing company is expected to report profit in its first quarter as a public company, though a slight one.

Zoom Video IPO: 5 things to know about the videoconferencing company

PagerDuty has largely avoided the notoriety that gains have provided Beyond Meat and Zoom Video, but the San Francisco software company has also doubled its valuation since going public. Like Zoom, analysts wonder if the valuation has gotten ahead of the opportunity, but PagerDuty won more buy ratings in its wave of initiations this month.

PagerDuty IPO: 5 things to know about the DevOps company

Pressure will be on all three young companies to prove their booming valuations are worthy of sticking around, and plenty of people are betting the other way: Shorts have pushed up fees to borrow shares off the shallow floats to some of the highest around, with Beyond Meat leading the list.

While Wall Street’s freshmen take their turn in the earnings spotlight, the veterans will largely hang back. Only five S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.36%  components are expected to report earnings in the coming week, and no Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.01%  components will report. Slightly more than three dozen companies in the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.27%  are on the docket, though, as software earnings continue to roll in.

Salesforce leads the software parade

Salesforce.com Inc. /zigman2/quotes/200515854/composite CRM -0.16%  is one of the most prominent software companies in Silicon Valley, and has long been a favorite of analysts and investors. That sentiment could be shifting, however, as a weak forecast in its last earnings report hit the stock, which has been treading water since. When the company reports earnings Tuesday, Salesforce may face a tough outlook again, as it accounts for a recent outage and reported resulting rebates.

While the 2019 IPOs will command some headlines, the 2018 class will also be prominent with half a dozen of last year’s new entrants on the docket: Docusign Inc. /zigman2/quotes/205992027/composite DOCU +0.53%  , Domo Inc. /zigman2/quotes/205658425/composite DOMO -1.64%  , Elastic N.V. /zigman2/quotes/209635082/composite ESTC +1.84%  , Pivotal Software Inc. /zigman2/quotes/205113305/composite PVTL +1.17%  , Smartsheet Inc. /zigman2/quotes/207006006/composite SMAR +0.11%  and Stitch Fix Inc. /zigman2/quotes/208173073/composite SFIX -4.92%  . Other tech companies expected to report this week include Box Inc. /zigman2/quotes/208773138/composite BOX -0.82%  , Amabarella Inc. /zigman2/quotes/207997433/composite AMBA +1.34%  , Cloudera Inc. /zigman2/quotes/209152367/composite CLDR +1.28%  , Coupa Software Inc. /zigman2/quotes/209884077/composite COUP +1.78%  , Guidewire Software Inc. /zigman2/quotes/206022311/composite GWRE +0.54%  , MongoDb Inc. /zigman2/quotes/203302825/composite MDB +1.33%  and SecureWorks Inc. /zigman2/quotes/202179762/composite SCWX +0.46%  

More retail and food

After a couple weeks chock full of retail reports, we are down to just a handful remaining. The coming week’s slate includes Ann Taylor and Lane Bryant parent Ascena Retail Group Inc. /zigman2/quotes/201535861/composite ASNA -6.13%  , The Michaels Companies Inc. /zigman2/quotes/207984083/composite MIK -5.85%  , Kirkland’s Inc. /zigman2/quotes/210508079/composite KIRK -4.55%  , Ollie’s Bargain Outlet Holdings Inc. /zigman2/quotes/208674659/composite OLLI +0.07%  , Tiffany & Co. /zigman2/quotes/209249105/composite TIF -0.14%  and Zumiez Inc. /zigman2/quotes/210420137/composite ZUMZ -1.57%  Two food companies in the S&P 500 index will also report in J.M. Smucker Co. /zigman2/quotes/203835894/composite SJM -0.10%  and Campbell Soup Co. /zigman2/quotes/202107764/composite CPB +0.80%  

This article has been updated with additional information.

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N/A
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N/A
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3.36%
Market Cap
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Jeremy Owens is MarketWatch’s technology editor and San Francisco bureau chief. You can follow him on Twitter @jowens510. Emily Bary is a MarketWatch reporter based in New York.

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