Reddit Stocks: What meme stocks are trending today? – September 11, 2023

US futures

• Dow Jones Industrial Average is up 0.2%
• S&P 500 is up 0.5%
• Nasdaq 100 is up 0.8%

US futures are trading higher at the start of a new week. The economic calendar is quiet today but will be a key focus later this week, with all eyes on inflation and retail sales data that will provide the latest clues on what the Federal Reserve will do with interest rates and what sort of landing the US economy can deliver.

Most discussed Reddit stocks

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:

1. Tesla
2. C3.ai
3. NVIDIA
4. Apple
5. Eni
6. Grupo Televisa
7. Morgan Stanley
8. Disney
9. Meta
10. Visa

Most active US stocks before the bell

Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:

1. Hostess Brands
2. Tesla
3. Crinetics Pharma
4. Nikola
5. FuelCell Energy
6. Kenvue
7. Qualcomm
8. Apple
9. AMC Entertainment
10. Lucid Group

US premarket winners and losers

Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:

Top US stocks to watch

Let’s have a look at the top stocks to watch today.

Tesla stock named as Top Pick

Tesla shares are up 6% at $263.93 this morning and at their highest level since the start of August after Morgan Stanley upgraded the electric vehicle maker to Overweight, naming it as its Top Pick as it hiked its target price to $400 from just $250.

The broker had one of the most bearish views on Tesla before the upgrade, but this has dramatically changed as analyst Adam Jonas outlined his prediction that the company’s Dojo supercomputer can unlock its “AI mojo” and add up to a staggering $500 billion to its enterprise value. That is part of a broader view that Tesla is about much more than just selling cars as attention turns to the likes of its robotaxis, self-driving technology and services.

Notably, Italian luxury carmaker Ferrari was Morgan Stanley’s top pick in the sector before being replaced by Tesla.

Nikola suffers yet another fire

Nikola shares are up 2.1% today and rebounding from three-month lows after reports broke on Friday that claimed another one of its trucks caught fire during a test of the vehicle’s safety, according to Benzinga.

That is the second fire in just a week and the fourth one of this year, the report said. The previous incidents forced Nikola to recall its electric trucks and press pause on new sales, which has hurt its share price and prospects as investors worry it will force it to burn through more cash and take much longer to become profitable.

Apple iPhone 15 launch marred by potential China ban

Apple shares are up 1.4% before the bell. The company is under the spotlight ahead of the launch of the new iPhone at an event tomorrow, although the mood has been soured by reports that China is planning to ban public sector workers from using iPhones and other foreign-made tech at work.

Pressure is on for the new model to revive demand considering iPhone sales have been under pressure in recent quarters. Upgrades are, once again, expected to be incremental and reports have suggested volumes of the iPhone 15 could stay flat versus the 14, although higher prices should keep revenue growing. Wall Street currently believes the new model will allow iPhone sales to return to growth in the 2024 financial year, when analysts believe they will hit a new record high.

The main concern in China is that any ban could dent demand in the biggest smartphone market in the world. China accounts for about 18% of Apple’s revenue but analysts are torn on what the impact could be, with predictions varying from 1% to 20% of its revenue in the country estimated to be at risk.

You can find out everything you need to know about the new model and the potential impact from any ban in China in our How Will the New iPhone 15 Impact Apple Stock?

Qualcomm to supply 5G chips to Apple

Qualcomm is up 6.7% this morning after announcing it has signed a new deal with existing customer Apple that will see it supply 5G chips to the iPhone maker through to 2026.

No other details were revealed but it is thought to have been signed before an existing deal between the two companies that was originally struck in 2019 expires later this year.

Importantly, the new deal suggests Apple is still having a tough time developing its own chip in-house that it plans to one day replace what it currently buys from Qualcomm. Some had expected the iPhone 15 that should be launched tomorrow would have been the last one to use Qualcomm chips. Apple accounts for over 22% of Qualcomm’s revenue.

NVIDIA’s valuation multiple hits 2023-low

NVIDIA shares are up 1.1%. The chipmaker’s valuation multiple using its price-to-earnings ratio based on predicted profits over the next 12 months has dropped to its lowest level in 2023 at 31.9x.

That sat as high as 63x back in May but, having raised guidance and seen a real tangible boost from AI, estimates have headed higher and brought that multiple down. It is still a premium of over 30% compared to the industry average, which currently sits at about 24x.

Meta to unleash new AI model in 2024

Meta shares are up 1.3% today on news it is building a new AI system that can rival the most advanced model offered by ChatGPT-owner OpenAI, according to unnamed sources speaking to the Wall Street Journal.

The social media giant is hoping the new AI system will be ready early next year and will be several times more powerful than the Llama 2 model released just a couple of months ago. Meta is currently building the datacentres needed to power the system, which is seeing it buy more advanced H100 chips being sold by NVIDIA, the report said.

Can Arm IPO revive the market?

The IPO market could get a much-needed jolt this week when British semiconductor firm Arm completes its US listing this week. We know that the IPO will be priced between $47 to $51 per share and the final pricing is expected to happen on Wednesday, with reports suggesting the stock will start trading on Thursday.

That will see current owner Softbank raise up to $4.87 billion and should give Arm a valuation of about $52 billion! That would make it the biggest US IPO since electric vehicle maker Rivian managed to earn a valuation of $70 billion when it went public in 2021. However, it was previously expected to try to earn a valuation of up to $80 billion, and it is also far below the $64 billion price tag earned when owner Softbank bought the remaining shares in Arm it didn’t already own earlier this year. It is, however, a large premium to the $32 billion spent by Softbank on taking Arm private back in 2016!

The valuation could be lofty considering Arm generated just $524 million in net profit in the year to the end of March. That potential valuation could give it a multiple of somewhere around 99x earnings. A wave of other companies are waiting to go public and will be watching the reception Arm and its valuation gets from the markets.

You can read more in Everything You Need to Know About the Arm IPO and discover what it could mean for the broader market in Can Arm Revive the IPO Market?

Can Oracle keep up the momentum?

Oracle shares are up 1.2% and at all-time highs ahead of first quarter results out after the markets close today. The company delivered record revenue in the recently-ended financial year and it should be a solid start to the new one.

 Revenue is forecast to rise 9% from the year before to $12.47 billion, with its cloud services arm continuing to counter subdued demand for hardware. It too is seeing an influx of demand for its cloud services to power generative AI workloads and Oracle is also providing GPU clusters to Wall Street’s favourite stock of 2023 and the posterchild of AI, NVIDIA. Yet, Oracle is yet to experience its own AI moment like NVIDIA considering it continues to trade at a substantial discount to its rivals.

Adjusted EPS is expected to rise 11.8% to $1.15. Growth is expected to remain pretty stable this year compared to what we saw in the last.

Alphabet braces for trial over search dominance

Alphabet shares are up 0.4% as markets prepare for a landmark antitrust trial to begin tomorrow, when the US Justice Department is expected to argue that Google broke rules to gain its dominance in online search.

Reports suggest the argument will be that Google paid billions to companies like Apple and AT&T to ensure Google remained the default search engine on devices, which has also stoked complaints from rivals like DuckDuckGo that claims it has struggled to gain market share because of Google’s actions.

Microsoft is also likely to be among those keeping a close eye on the case after reviving its Bing search engine, infusing it with AI tools and declaring war on Google’s monopoly over search earlier this year.

The case was originally brought forward under former US president Donald Trump, but current president Joe Biden has continued to push the trial since taking over.

Has Disney stock found the bottom?

Disney shares are up 0.2% after hitting their lowest level since 2014 last week, with the House of Mouse feeling the pressure as it tries to turnaround its fortunes and the ongoing dispute with Charter Communications, which is trading flat this morning.

Disney has pulled its channels from Charter’s Spectrum cable service, including its sports content, as the pair fail to agree on fees. Charter wants to overhaul the entire deal and has said it will walk away if it needs to, while Disney is pushing for more money for its content but has said it “stands ready” to resolve the dispute. Macquarie said that it believes the next few days, when we will see more customers miss out on US Open, college and NFL football content, will force both sides to strike a deal.

Notably, more disputes are erupting. Hearst Television has removed its content from Dish Network’s Dish TV, which said Hearst is “demanding tens of millions of dollars in rate increases that would affect customers”. Dish shares are up 0.3% in premarket trade today.

Alibaba’s ex-CEO casts doubt on cloud IPO

Alibaba shares are down 0.8%, following its Hong Kong shares lower, after its former CEO Daniel Zhang quit just months after taking charge of its cloud computing arm ahead of an IPO.

Zhang was previously the CEO of Alibaba but moved over to the cloud computing arm just two months ago to ready it for an IPO as part of a broader plan to break Alibaba up into six businesses. That has sparked fears that there are disagreements among management over the major restructuring and cast doubt over the timeline that aims to list the business next year. The cloud computing spin-off is expected to be one of the largest of the breakups, with a valuation of somewhere between $40 billion to $60 billion.

New group CEO Eddie Wu will now also take charge on an acting basis of the cloud computing arm.

Kenvue stock offers buying opportunity

Kenvue is up 3.6% after hitting its lowest level since being spun-off from Johnson & Johnson on Friday as investors fret over legal cases stemming from Tylenol, although JPMorgan said it believes the negative reaction has been “exaggerated” and now provides a buying opportunity for medium-to-long-term investors.

Deutsche Bank also upgraded the stock to Buy this morning, which is providing further support as it suggests it too believes the recent selloff has been overdone.

Moderna strikes deal to work with Immatics

Moderna is up 0.2% while Immatics is up 5.8% after the pair announced they will work together to develop cancer therapies.

Moderna will pay Immatics $120 million upfront and up to another $1.7 billion in future milestone payments as part of the deal. The pair will collaborate on several products by combining Immatics’ TCR platform and Moderna’s mRNA technology.

Moderna is trying to expand its mRNA technology that was used to develop its Covid-19 vaccine to other areas and is already working with other companies trying to use it to find new cancer drugs.

RTX stock sinks on engine woes

RTX is down 4.1% and at its lowest level since late 2021 after warning it will book a $3.00 billion to $3.50 billion hit over the next several years because it needs to remove and check 600 to 700 geared turbofan engines made by Pratt & Whitney that are mostly used in Airbus planes.

The issue concerns the condition with the powder metal used to manufacture some parts within the engines. The checks will ground more planes. It said Pratt & Whitney is examining the impact on other engine models but is expecting a milder impact. Notably, most of the anticipated charges will be booked in the third quarter, when it will take a $3 billion charge.

RTX also downgraded its guidance as a result, warning sales this year will be between $67.5 billion to $68.5 billion, down from its previous range of $73.0 billion to $74.0 billion. It reiterated its annual EPS and cashflow guidance.

Will JM Smucker buy Hostess Brands?

JM Smucker is down 8.9% on reports it is close to striking a deal to buy snack maker Hostess Brands for around $5 billion, according to unnamed sources speaking to Reuters over the weekend.

Hostess Brands is best known for making Twinkies and trading up 14.7% and at all-time highs. The deal is expected to exclude Hostess’ net debt of around $900 million. Reports of a potential deal first surfaced last month, which has led to its share price rising on hopes of a takeover.

Can Visa and Mastercard hit all-time highs?

Visa shares are up 0.6% at $248.69 and on the cusp of testing the all-time highs of $248.87 hit last week, while Mastercard is up 0.3% at $416.19 and also not far behind last week’s record high of $417.78 that was hit at the end of August.

Is there any stopping Eli Lilly stock?

Eli Lilly shares can’t stop rallying, with the pharmaceutical giant trading 0.5% higher this morning and poised to open at fresh all-time highs. The stock is up over 60% since the start of the year and have more than quadrupled since the beginning of 2020.

The recent rally has been mostly driven by excitement around its diabetes drug Mounjaro and the prospect that it could be approved to help treat weight loss and provide a new blockbuster drug.

Notably, Danish firm Novo Nordisk is also up 0.3% and at record highs thanks to the hype around its equivalent drugs like Ozempic and Wegovy, which has helped the pharmaceutical giant become the most valuable company in Europe.

JPMorgan said last week that both companies will be leaders in the new weight-loss drug category, which it forecasts could be worth $100 billion in annual sales by 2030. It described Eli Lilly and Novo Nordisk as a duopoly, although it also flagged rising competition from potential new entrants like Pfizer and Amgen.

Eni stock tests 7-month highs

Italian oil giant Eni is up 1.4% on the NYSE today and set to open at seven month highs, as shares in Milan rocketed to their highest level in over three years. The RSI is on the cusp of entering oversold territory, which may limit further gains going forward.

Oil prices have been pushing higher over the past two months but we have seen gains temper in recent days, although Brent remains above the $90 threshold.

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