Reddit Stocks: What meme stocks are trending today? – July 12, 2023

US futures

• Dow Jones Industrial Average is up 0.5%
• S&P 500 is up 0.7%
• Nasdaq 100 is up 0.9%

US CPI supports markets

CPI rose 3% year-on-year in June, slowing from the 4% rise we saw in May. That was just below the 3.1% forecast by economists. The core reading, which is more closely-watched by the Federal Reserve, rose 4.8% following the 5% we saw the month before, coming in notably slower than the 5.2% forecast.

A faster deceleration in inflation is being welcomed by the markets and fuelling hopes that we are closer to interest rates peaking than previously feared. Still, the data will do little to change bets that we will see another 25bps rate hike when the Federal Reserve meets later this month, but markets are much more dividend and unclear about what happens beyond here, although the majority see them being held steady throughout the rest of 2023 and today’s data should only fuel these hopes further. Still, this is just one, albeit key, data point. Attention in the US will now turn to US initial jobless claims and PPI data out tomorrow and the start of US earnings season on Friday.

Notably, Federal Reserve members Loretta Mester, Raphael Bostic and Neel Kashkari all speak later today.

Elsewhere in the economic calendar today we have the Bank of Canada’s interest rate decision, when it is expected to push ahead with its second consecutive 25bps increase. The European Central Bank’s Philip Lane is also speaking this morning.

Q2 earnings season is approaching

The start of US earnings season this week could also bring surprises, with the S&P 500 forecast to report its worst set of earnings in two years while rising recession risks weigh on the outlook for the second half.

Major US banks are set to kick things off on Friday when JPMorgan, Wells Fargo and Citigroup report results. Those most exposed to rising interest rates are set to outperform those that lean more toward trading and investment management. A clean bill of health from the recent stress tests provides some certainty following the banking crisis we saw in March, but tighter capital requirements are coming and recession risks are increasing. Provisions are growing as a result as the sector becomes more pessimistic about the outlook. You can find out everything you need to know, from dates and consensus numbers to our latest technical analysis, in our US Banks Q2 Earnings Preview.

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. Rivian
2. Coinbase
3. Robinhood
4. Carvana
5. Tesla
6. PENN Entertainment
7. Advanced Micro Devices
8. Visa
9. Apple
10. NVIDIA

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. Activision Blizzard
2. Tesla
3. Nikola
4. Rivian
5. Palantir
6. Lucid Group
7. SoFi
8. Marathon Digital
9. Riot Platforms
10. Tilray

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

Wells Fargo has warned the special rebalance of the Nasdaq 100 designed to reduce the overconcentration on a small group of stocks could put the brakes on the rally we have seen in tech this year. Just seven stocks account for over half of the 100-strong index but Wells Fargo said it expects the top components to see selling pressure between now and July 24, when the new weightings will take effect. The new weightings will be announced on July 14. It said that stocks that were part of the group downsized last time this happened in 2011 suffered a 2% to 3% fall in this period, stating that Microsoft, Apple, Amazon, Meta and Alphabet will be the ones most impacted this time around. Bad news for some could be good news for others, with Starbucks, Mondelez and Booking Holdings expected to see their weights lifted the most.

Microsoft is up 1% while Activision Blizzard is down 1.8%. The pair were given the green light to complete their $69 billion combination by a US judge, which has prompted UK regulators to press pause on their efforts to block the deal. The UK’s objection is a major stumbling block so the news is welcome. The US judge said the Federal Trade Commission, which was also fighting against the deal, had failed to show it would harm competition. ‘After today’s court decision in the US, our focus now turns back to the UK. While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA,’ said Microsoft president Brad Smith. Importantly, time is running out to complete the deal by the July 18 deadline…

NVIDIA is up 1.3% after the Financial Times reported the semiconductor firm could be recruited as an anchor investor ahead of the highly-anticipated IPO by chip designer Arm. Securing big name investors ahead of an IPO can install confidence in the markets and help cement its valuation, which is especially important given the bloated valuations some companies have to come market with in recent years. The report suggested NVIDIA is looking to invest in Arm based on a valuation of $35 billion to $40 billion, but that is thought to be around half the $80 billion that Arm’s owner Softbank is aiming for. Softbank bought Arm for about $32 billion back in 2016 and delayed plans to list the business last year. Arm’s IPO in New York is expected to happen before the end of 2023, when it is expected to raise around $10 billion.

Advanced Micro Devices is up 1% at $112.47 after TD Cowen raised its price target on the chipmaker to $135 from $115 this morning.

Broadcom is trading higher and poised to open at fresh all-time highs after EU regulators gave their approval for its $61 billion acquisition of cloud services firm VMware. Broadcom has offered remedies to help rival Marvell Technology and other competitors in order to secure the green light.

Netflix is up 1.1% at $445 and testing recent highs after UBS hiked its target price to $525 from $390 on the belief the streaming giant’s efforts to crackdown on password sharing will accelerate growth. ‘Checks on engagement, downloads and search interest were all constructive for the newly launched paid-sharing markets,’ said analyst John Hodulik. Netflix reports earnings next week.

Tesla is up 2.6% at $276.90. Citigroup raised its target price on the electric carmaker to $278 from $215 this morning. There are also reports that Tesla is planning to launch a household electricity supplier in the UK after posting a job listing looking for an experienced executive to join Tesla Electric, which already sells electricity in parts of the US. That should bring Tesla’s other businesses further under the spotlight after attention over its charging network increased when a wave of automakers signed-up to access it from next year.

Smaller electric vehicle stocks remain among the most traded. Rivian is up 2.3% at $25.43 after Evercore ISI raised its price target on the company to $30 from $25. That new support comes after a nine-day winning streak snapped at the start of the week, with markets having welcomed better than expected delivery numbers in the second quarter and news it has started shipping electric vans made for Amazon to Europe for the first time.

Nikola is up 1.4% this morning. The company has gained ground over the past month despite struggling to secure enough shareholder support for its plan to raise fresh equity, prompting it to keep delaying its upcoming meeting of investors. The situation is bad enough that Evercore ISI suspended its rating on the company this morning, saying the timing of any potential fundraising is too unclear. ‘Nikola is further complicated by shareholder votes required to increase the number of authorized shares, as well as a campaign by former CEO and current shareholder Trevor Milton against the proposal,’ the broker said in a note. It also highlighted that this raises the risk Nikola is forced to delist if its share price falls back below the $1 threshold for too long.

Lucid Group is up 2.3% and set to open at fresh three-month highs.

Canoo is up 5.8% after delivering three Crew Transportation Vehicles to NASA’s Kennedy Space Centre in Florida that will transport astronauts to the launch pad for the Artemis lunar missions. That is building on the supportive news earlier this week that it has expanded its partnership with the US Department of Defense.

Mullen is down 3% after unveiling its new PowerUp service yesterday. The new mobile charging truck can help vehicles recharge when power is unavailable, such as for roadside assistance and emergency response.

Elsewhere, Disney is up 0.8% amid reports it is in talks about selling all of part of its digital and television business in India, according to an unnamed source speaking to Reuters. The talks are at a ‘very, very nascent’ stage and no potential buyer has been identified or approached. That comes as Disney faces pressure to improve profitability and as competition in India intensifies. Notably, speculation about Disney being a takeover target resurfaced this week after Needham analyst Laura Martin predicted Disney will be sold within the next three years. The analyst has touted a potential sale of Disney before and proven incorrect, but it has once again reignited discussions about what company could be interested. Apple, as was the case in the past, has been touted as a potential frontrunner on theories it could leverage Disney’s world-class content with its growing services business and two billion installed devides. However, recent regulatory probes suggest any company large enough and rich enough to afford to take on Disney could face a tough time convincing regulators.

Illumina has been hit with a record EUR452 million fine issued by European regulators after it closed its acquisition of cancer test maker Grail before securing the necessary approvals.

Visa is up 0.3% and set to open at its highest level in just under two years. Rival Mastercard is up 0.5% and poised to close at all-time highs if it can sustain today’s premarket gains!

Domino’s is up over 12% and at an 11-month high after striking a deal to sell its pizzas through the Uber food delivery app. US customers will be able to order using Uber and other services like Postmates by the end of the year, but stores will still directly handle the delivery. Uber is up 1.7%.

Chinese stocks Alibaba and JD.com are both up 2% to 4% after reports said executives from internet companies met with premier Li Qiang in a further sign that the government is looking to support the industry after a lengthy regulatory crackdown.

Coinbase, Marathon Digital and Riot Platforms are 0.6% to 3.8% as bitcoin climbs to a one-week high and recovers back above $30,700, fuelled by hopes that we could see the first bitcoin ETF launched this year despite regulatory pushback.

Trading platform Robinhood is 12.26 and set to open at a nine-month high, having popped this week after JMP Securities reiterated its Outperform rating and $25 price tag.

Carvana is up 2.9% and set to open at a 10-month high of $26.65 after having its target price doubled to $50 by JMP Securities. The used car retailer has rallied since delivering better than expected results at the start of May, boosted further by its decision to lift its full year outlook in early June. That has lifted expectations ahead of its next set of quarterly results due out in early August. Notably, Carvana is still heavily shorted with short interest standing at over 63% of its float, according to Fintel.

PENN Entertainment is a new entry in the most discussed-stocks list and is up 1.6% before the bell. The sports entertainment stock briefly hit its highest level in six weeks yesterday before reversing course and closing down for the day.

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