PagerDuty (PD): Buy the dip?

​Key Points

• Despite a stronger-than-expected new Jobless Claims report, the stock market indices finished Thursday in the red.
• Workhorse Group (WKHS) is coming up with alternatives to the USPS contract, slowly and quietly.
• Shares of PagerDuty (PD) dropped more than 10% despite a solid quarterly performance.

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​Overall Market

Despite a Stronger-than-expected New Jobless Claims Report, The Stock Market Indices Finished Thursday in The Red

All three indices finished Thursday in the red, despite the better-than-expected new jobless claims report. Less than 400,000 people filed for unemployment claims this week, which is the lowest number since the start of the pandemic. Investors are now waiting for May's Employment Report to come out tomorrow to confirm that the economy is indeed on track.

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​WHat's Up?

Workhorse Group (WKHS) is Coming Up with Alternatives to The USPS Contract, Slowly and Quietly

Shares of Workhorse Group (WKHS) were up more than 19%. Although the recent price jump is mainly due to the short squeeze rally, there might still be a path for Workhorse to survive.

I spoke with one of our analysts, Felipe, who is conducting extensive research on Workhorse, and he provided some interesting insights. 

It seems the company is coming up with alternatives to its highly-anticipated but denied USPS contract. For example, Workhorse has entered new partnerships with UPS (UPS) to supply delivery drones. Moreover, the electric vehicle maker closed two important deals recently, including a purchase order for 6,320 units of its C-Series vehicles that will generate more than $300 million for the company until 2026. 

Although the USPS contract denial was a significant issue for the company, Workhorse built a solid alternative for its survival. 
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As soon as Felipe is over with his research, we plan to give you a comprehensive Workhorse stock analysis. Stay tuned!

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​What's Down

​Shares of PagerDuty (PD) Dropped More Than 10% Despite a Solid Quarterly Performance

Aside from most short squeeze stocks that ended Thursday much lower than where they landed yesterday, PagerDuty (PD) shares grabbed my attention. The stock was down more than 10%.

It is a surprising drop because the company's earnings report was quite solid. Revenue was up more than 28% and customers with annual revenue above $1 million were up 55%. Those are key numbers when you sell enterprise software and show more clients are trusting the service enough to spend at least a million on the company's products and services. 

It seems investors are spooked about the wider losses. When I dug into the reasons, the wider loss is primarily due to higher marketing costs due to a TV advertisement campaign and change in the timing of the company's annual summit.

If you look at the company's Stock Card, its revenue is expected to grow rapidly, and it generates free cash flow, despite an unprofitable operation. I own a few shares, and I believe it's a beaten-down stock worth owning if you are comfortable with tech sectors' volatility. 

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