Reddit Stocks: What meme stocks are trending today? – July 20, 2023

US futures

• Dow Jones Industrial Average is up 0.1%
• S&P 500 is down 0.2%
• Nasdaq 100 is down 0.6%

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. Carvana
3. C3.ai
4. Netflix
5. NVIDIA
6. Visa
7. Apple
8. AMD
9. Microsoft
10. Robinhood

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. American Airlines
2. Tesla
3. Nikola
4. Carvana
5. Marathon Digital
6. Palantir
7. Lucid Group
8. Plug Power
9. Rivian
10. KeyCorp

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

Tesla is down 3.8% at $280.60 this morning. A sales and earnings beat in the second quarter is being overshadowed by fears that more price cuts are to come and that margins may have not yet bottomed-out. The carmaker’s gross margin hit its lowest level in four years and Tesla said it is willing to see it fall further if necessary. It also said production will fall in the third quarter because of planned summer shutdowns, although that may be timely considering inventories continue to rise and heighten the need for more price reductions. The pressure on profitability is also heightening the need to advance its self-driving technology using AI, although it is already years behind schedule. Cybertruck demand is ‘off the hook’ and a sum-of-parts valuation is coming more into play as its charging network and energy business begin contributing to profits. The selloff today reflects a combination of a pullback from the rally we have seen in 2023 and concerns over the short-term outlook, but the prospects over the longer-term are getting exciting. That sentiment has been echoed by other analysts today, with Deutsche Bank raising its view to $300 from $270, Piper Sandler to $300 from $280 and Wedbush continuing with its more bullish view after hiking its target to $350! You can find out more in Tesla Stock Falls as Price Cuts Hurt Margins.

Netflix is down 6.1% at $451.25 and set to suffer their largest daily fall of 2023, freefalling from 18-month highs, as investors worry that its strategy to revive growth through a crackdown on password sharing and a new ad-supported tier is not taking-off as quickly as hoped. The streaming giant smashed expectations after adding 6 million subscribers in the latest quarter, well ahead of the 1.8 million forecast, largely thanks to its password policing. While that momentum is welcome, investors focused more on the fact revenue rose by a more tepid 2.7% to $8.2 billion, which fell short of the $8.3 billion forecast. The amount of revenue it squeezes out of each user is also dwindling. The hope is that its new ad-supported tier can provide a boost as that gains traction. The bar was high for Netflix considering the stock is up around 67% since the start of the year, having recovered some ground following the selloff we saw in 2022. Netflix admits it has a job to do to accelerate growth and it is still early days for the ad-tier, but its outlook for third quarter revenue of $8.5 billion was also below the $8.7 billion forecast. Netflix said strike action in Hollywood is having an impact and will reduce spending this year, but this will boost free cashflow in 2023 to around $5 billion from its previous goal of $3.5 billion. Several brokers raised their target price on Netflix this morning, including BofA Global Research to $525, JPMorgan to $505 and Oppenheimer to $515.

Blackstone is down 2.8% after earnings slumped 39% in the second quarter, hitting their lowest level in two years, as asset sales involving its real estate and credit portfolios stalled, overshadowing news it has become the first private equity firm to manage over $1 trillion.

American Airlines is down 0.9%. Appetite for travel remains strong, allowing it to raise its full year expectations. The recovery from the pandemic is over and airlines are reaching new heights, partly because prices are much higher than four years ago. EPS jumped to $1.88 in the latest quarter from $0.68 the year before, beating the $1.58 forecast. American Airlines said it is now expecting annual adjusted EPS of $3.00 to $3.75. It was previously guiding for $2.50 to $3.50. Rival United Airlines upped its outlook yesterday and is up 2.6% today, following on from an earlier upgrade out from Delta Air Lines, which is down 0.1% before the bell.

J&J is up 1.1% after raising its profit outlook for 2023 following stronger growth in demand for its medical devices. The company said it is now anticipating annual adjusted EPS of $10.70 to $10.80, up from its previous range of $10.60 to $10.70. Earnings of $2.80 in the latest quarter also beat the $2.62 forecast. Medical devices performed better than expected as hospitals work through backlogs created during the pandemic and complete more surgeries and procedures.

Kenvue, the consumer health business spun-out of J&J, is up 0.8% after it also raised its outlook for the remainder of the year as consumers continue purchasing everyday items like skincare products. This was the first set of results since the separation and it impressed after forecasting annual adjusted EPS of $1.26 to $1.31 this year, ahead of the $1.23 anticipated by Wall Street.

Abbott Labs is up 0.2% as it too reaps benefits from the increase in the number of surgeries being completed as sales of medical devices came in higher than anticipated in the latest quarter, helping it beat expectations. Adjusted EPS of $1.08 came in above the $1.05 pencilled-in by Wall Street.

Chipmakers are in play today after Taiwanese firm TSMC lowered its outlook and postponed the launch of its new factory in Arizona to 2025. The company, which is a major supplier to the likes of NVIDIA and Apple, is down 3%. TSMC reported a sharp drop in profit as anticipated in the second quarter. Net profit was down 23% at TWD181.8 billion, although this was not as bad as feared. Sales were down 13.7% from last year.

NVIDIA is down 0.9% at $466.39. That more cautious outlook from TSMC is overshadowing more price target increases. Barclays hiked its target price to $600 from $500 this morning while Susquehanna raised its view to $575 from $450. Tesla CEO Elon Musk said the carmaker will take NVIDIA hardware as fast as it can deliver it. Tesla is using NVIDIA hardware to help make its AI ambitions become a reality and advance its self-driving technology, suggesting demand for AI chips is far outpacing supplies.

AMD is down 0.8% at $115.50 after Wolfe Research initiated coverage late yesterday with an Outperform rating and a $150 price target, saying it believes earnings will rebound strongly in the second half and provide momentum into 2024. CEO Lisa Su is said to have met with suppliers behind closed doors at an event in Tapei yesterday, according to reports from Focus Taiwan.

Apple is down 0.5% at $194.17 and falling from fresh all-time highs because of the weak read-across from the TSMC results. Bloomberg Intelligence said TSMC’s results ‘suggests a deeper-than-expected downturn in smartphone chips and end-market handset demand, aggravated by worsening macroeconomic conditions, particularly in China.’ Demand for iPhones has held up better than Android models but the results suggest the entire market is finding things more difficult right now. That is taking attention away from reports that Apple is quietly working on its own AI tools that it hopes could challenge the likes of ChatGPT. It is thought to have its own framework to create large-language models that help train AI tools, according to Bloomberg. Credit Suisse upped its target price on Apple to $220 from $200 this morning.

Microsoft, which appears to be carving out an early lead in AI versus its Big Tech rivals like Apple, Amazon, Meta and Alphabet, is trading marginally higher today at $355.10. The company opened at all-time highs yesterday but closed down. The company has found support as its deal to buy Activision Blizzard edges closer to completion, even if the pair have agreed to extend the deadline to October 18 as they try to overcome the last of the regulatory hurdles. Microsoft is expected to be among the best performers of the group of five when it reports earnings next week and has the greatest potential to see a boost from AI. Citigroup raised its target price on Microsoft to $425 from $340 this morning, while Stifel upped its view to $380 from $340.

Philip Morris is trading marginally higher after adjusted EPS of $1.60 came in above analyst forecasts of $1.47, helped by easing tobacco and labour costs. It also said it now expects adjusted EPS to rise around 8% to 9.5% over the full year.

Newmont is down 4.4% today after strike action in Mexico and wildfires in Canada took its toll in the latest quarter, causing earnings to come in below forecasts. Adjusted EPS of $0.33 in the quarter was way below the $0.44 estimate from Wall Street. That was because the all-in cost of producing each ounce of gold jumped to $1,472 from $1,199 the year before as production fell to 1.2 million ounces from 1.5 million.

Visa is up 0.2% at $241.94 while rival Mastercard is down 0.2% at $397.47. Morgan Stanley reiterated its Overweight rating on both payments giants ahead of results next week, citing upside potential from the strength in international travel, while also pointing to signs of a potential slowdown in consumer spending in the US. The broker has a $290 price target on Visa and a $440 price target on Mastercard.

The rally in Carvana shares stepped up a gear yesterday, when the used car retailer popped over 40%. The stock is up another 3.9% this morning at $57, marking a new 14-month high! The company posted positive Ebitda and announced a deal to restructure its debt yesterday, igniting hopes that it is well and truly making a comeback after falling from grace in 2022. The greater certainty over its near-term future and improvement in financial performance has prompted several brokers to raise their price target and show they now think it has a chance of being revived. For example, Wedbush had a target price of just $1 before the update but has now raised that to $40. Some are even more bullish, with increases from Jefferies to $55 and DA Davidson to $60. Others are more pessimistic, with JPMorgan’s target sat at just $15.

Robinhood is trading slightly lower before the bell after closing at 15-month highs yesterday. The trading platform has seen its share price rocket over 31% in the last month alone, although it is in deep overbought territory and has surpassed the $11.95 target price set by brokers. The company reached a $9.9 million settlement over a court case regarding losses suffered by customers during outages of its platform back in March 2020. The company reports results on August 2.

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