Reddit Stocks: What meme stocks are trending today? – August 3, 2023

US futures fall

• Dow Jones Industrial Average is down 0.1%
• S&P 500 is down 0.2%
• Nasdaq 100 is down 0.4%

US futures are under pressure today, with the S&P 500 and Nasdaq 100 both at their lowest level in around three weeks, as US bond yields jumped higher in wake of that surprise downgrade to the US credit rating by Fitch earlier this week, hitting rate-sensitive stocks and prompting some profit taking following the stellar gains we have seen in recent months.

US jobs market: Initial jobless claims rise as expected

We discovered this morning that US initial jobless claims rose by 227,000 in the week to July 29 following the 221,000 rise we saw the week before, meeting the prediction of economists.

That follows on from the hot ADP employment change report yesterday and sets the stage ahead of the more closely-watched non-farm payrolls data out tomorrow.

Later today, we have the ISM Services PMI for July, which is expected to show a slight deceleration in growth compared to what we saw in June. There are also factory orders due out for June, when we are expected to see a significant uptick compared to the previous month.

Bank of England hikes rates to 15-year high

A quick trip over to the UK, where the Bank of England raised interest rates by 0.25 percentage points as expected by the markets. That marked the 14^th successive rate increase and takes the country’s interest rate to 5.25%, representing a 15-year high.

The UK is having a much tougher time bringing inflation down, with CPI still standing at 7.9% compared to just 3% in the US. The BoE said it is hoping inflation will ease to 4.9% by the end of 2023, having previously forecast 5.1%, and said it should fall toward 3% over the next 12 months. However, it reiterated it will do what it takes to bring inflation down to its 2% target.

There was a 6-3 split on the vote to increase rates but there was a three-way split for the first time this year. Two members pushed for a 50bps hike, two pushed for the 25bps and two thought rates should have been kept flat.

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. Advanced Micro Devices
2. Visa
3. Shopify
4. Apple
5. PayPal
6. NVIDIA
7. C3.ai
8. Robinhood
9. Tesla
10. Amazon

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. Nikola
2. Wayfair
3. Warner Bros Discovery
4. PayPal
5. Palantir
6. Tesla
7. Amazon
8. QuantumScape
9. Advanced Micro Devices
10. Grab Holdings

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 take a look at what is happening before markets open today…

Apple stock: Sales to fall for 3^rd straight quarter

Apple is down 0.5% this morning and at a three-week low ahead of third quarter results after the closing bell. Apple is expected to report its third consecutive quarter of lower sales and earnings are expected to stay flat. While that suggests there is little to get excited about, Apple shares are still lingering near-all-time highs the iPhone, which accounts for almost half of its revenue, has remained far more resilient during the slump in demand for electronics and because there are several new potential catalysts on the horizon. Its premium valuation and stellar gains booked this year may leave it vulnerable to profit taking, although Apple is more than capable of delivering a beat. Find out everything you need to know in our Apple Q3 Earnings Preview.

Amazon stock: All eyes on AWS and AI

Amazon is up 0.1% and also reports after markets close. The outlook is improving for Amazon after a volatile few years but it remains highly sensitive to how the wider economy performs and the outlook for the remainder of this year remains uncertain. Ecommerce sales should have returned to growth, although there will be worries about how the erosion of savings and the restart of student loan repayments will impact spending in the second half. Most of the attention will be on its cloud-computing arm AWS and how it is coping with AI workloads. Amazon may be trailing its rival Microsoft in terms of workloads, but is likely to follow by raising investment to ensure AWS is ready for the influx of AI demand. Amazon, with a weaker profit profile than its rivals, may have to work extra hard to counter this with more cost cutting initiatives. Find out what you need to know in our Amazon Q2 Earnings Preview.

Qualcomm stock: Smartphone slump continues

Qualcomm is down 9.5% this morning at $117.05, marking its lowest level in over three weeks. The company, which is the world’s largest manufacturer of processors used in smartphones (including both iPhones and Android handsets), provided a weak sales outlook and warned oversupply problems will remain a challenge until the end of 2023. Qualcomm and other chipmakers have seen demand plunge since customers were left inundated with hardware and management said this will continue to hurt demand in the second half. This saw smartphone processor sales fall 25% in the latest quarter! As a result of the ongoing glut, its forecast for revenue of $8.1 billion to $8.9 billion in the current quarter was on the low side compared to the $8.8 billion pencilled-in by analysts. It also forecast adjusted EPS of $1.80 to $2.00, which was also towards the low-end compared to the $1.94 forecast. Qualcomm said it is taking a ‘conservative view’ of the market and is preparing to cut costs in response to the ‘uncertain environment’. This will include job cuts, which will lead to ‘significant’ restructuring charges.

That led to price cuts this morning, with Piper Sandler lowering its view to $140, CFRA to $125, JPMorgan to $148 and Susquehanna to $140.

That is contributing to falls in other chip stocks today, with AMD down 0.2%, NVIDIA is down 1% and Intel is also trailing 1%.

PayPal stock: Margin crunch

PayPal is down 8.9% at $66.70, marking a three-week low. The payments giant saw an 11% rise in payment volumes and an 8% increase in revenue in the second quarter, alongside strong growth in earnings. However, the stock is tanking today because its margin disappointed after it booked higher provisions set aside for potentially bad loans and tighter underwriting conditions for loans it makes to merchants. That resulted in its adjusted operating margin being crunched to 21.4% in the second quarter from 22.7% in the first, sparking fears about profitability despite signs of resilient consumer spending. Adjusted EPS rose 24% from last year to $1.16. PayPal’s guidance for adjusted EPS of $1.22 to $1.24 in the third quarter compared to the $1.22 forecast by Wall Street.

A wave of brokers cut their target price on PayPal this morning, including Cannacord Genuity to $110, JPMorgan to $90, Piper Sandler to $77, and Jefferies to $70.

Shopify stock: Lack of roadmap overshadows beat

Shopify is down 3.3% before the bell at $60.37, hitting its lowest level in almost four weeks. The Canadian firm initially gained ground in extended hours after it beat expectations in the second quarter, having continued to attract merchants looking to tap-into its ecommerce services and benefit from price hikes. However, shares have since reversed after Morgan Stanley said management failed to provide a longer-term road-map, despite showing progress on several initiatives. Revenue was up 31% at $1.69 billion and beat expectations. Adjusted EPS of $0.14 was well ahead of the $0.05 estimate. However, it did sink to a loss at the bottom-line because of the costs of selling its logistics arm and the job cuts made this year. It warned sales growth will slow to a ‘low-twenties’ range in the current quarter, or ‘mid-twenties’ when it takes the divesture of its logistics business into account. Still, that was better than the 17% growth forecast by Wall Street.

A number of brokers raised their target price on Shopify this morning, including Piper Sandler to $58, Baird to $70, Evercore ISI to $74, RBC to $80, BofA Global Research to $75 and DA Davidson to $72.

Robinhood stock: Milestone spoiled by falling user numbers

Robinhood shares are down 5.2% today at $11.79, marking a three-week low. The trading platform reported its first bottom-line profit since it went public in the second quarter, but we are still seeing a selloff before the bell today as investors fret over falling user numbers. Robinhood reported GAAP EPS of $0.03, a surprise result considering analysts had expected a loss. Adjusted Ebitda of $151 million was also ahead of the $132 million estimate. Revenue jumped 53% from last year to $486 million and this was also a beat, although solely driven by the tailwind provided by higher interest rates. Robinhood lost 1 million users in just three months, although it continues to show signs of stronger engagement among the users it has retained as average revenue per user continues to climb.

The results prompted several brokers to up their target price on Robinhood this morning, including Piper Sandler to $11.50, JPMorgan to $12.50, Citigroup to $12 and Barclays to $11.

Warner Bros Discovery stock: Impresses with cost-cutting

Warner Bros Discovery impressed the markets with its cost-cutting efforts in the latest quarter, allowing it to post a smaller loss than Wall Street predicted and sending shares 0.9% higher today. Profitability is the key word across the streaming sector this year and news that its net loss came in at $1.24 billion compared to $3.42 billion the year before shows it is on the right path, helped along by a 16% drop in costs. However, its guidance for revenue in the current quarter came in below expectations.

DoorDash stock: Higher orders drive rosier outlook

DoorDash shares are up 1.8% in premarket trade. The food delivery giant revealed orders grew much faster than markets expected in the second quarter, allowing it to deliver its ‘best quarter ever’. Orders jumped 25% in the period when analysts had only anticipated a jump of 20%. That led to revenue rising by 33% to £2.1 billion, coming in just ahead of forecasts. One potential disappointment is that DoorDash remained in the red at the bottom-line when Wall Street saw scope for the company to deliver its first-ever, albeit small, profit. The fact DoorDash said it now expects to deliver adjusted Ebitda – its headline measure that more than doubled in the latest quarter – of between $750 million and $1.05 billion this year may have helped sentiment, having previously said it was aiming for $600 million to $900 million.

Moderna stock: Bumps up Covid-19 vaccine sales target

Moderna shares are up 1.2% and rebounding from its lowest level in over two and a half years! The company said it now expects to sell $6 billion to $8 billion worth of Covid-19 vaccines in 2023, up from its previous goal of just $5 billion, as it is experiencing greater demand from the private market in the US as it secures fewer orders from the government. The upgraded outlook is welcome considering rival Pfizer recently warned that the sales outlook for vaccines was uncertain. We saw Moderna’s vaccine sales plunge 94% in the second quarter to $293 million, although this still beat the $233.6 million forecast by Wall Street. For added context, Pfizer’s Covid-19 drug sales were down 83% in the same period. Moderna’s net loss per share of $3.62 was also smaller than the $4.04 predicted by analysts. Vaccination rates this fall are expected to be critical in deciding how overall vaccine sales fare across the industry this year.

Hasbro stock: Writers’ strike hits results

Hasbro is up 1% this morning and at fresh 2023-highs. The company warned it expects a sharper drop in sales this year as it expects the ongoing strikes in Hollywood to hurt its entertainment arm, which it has now agreed to sell in order to focus on its more profitable toy business. Hasbro warned annual sales will be down 3% to 6% this year, having previously warned it was expecting an low single-digit decline. Revenue was down 10% in the latest quarter but came in higher than expected, while adjusted EPS plunged to $0.49 from $1.15 the year before, missing the $0.57 forecast. Hasbro has agreed to sell eOne Film and its TV business to Lionsgate for $500 million, which it said will help ‘reset Hasbro for profitable growth’

Wayfair stock: Cost cutting delivers surprise profit

Wayfair shares are up over 10% today and at their highest level in over a year after it beat expectations in the latest quarter. The furniture retailer said revenue was down 3.4% in the second quarter at $3.17 billion and reported adjusted EPS of $0.21 following the $1.94 loss we saw the year before. That was better than the $3.1 billion in sales and the profit will be very welcome considering Wall Street forecast a $0.75 loss. That shows its cost-cutting plans are paying off. On the downside, customer numbers continued to fall and its international operations remain in the red.

ConocoPhillips and Occidental stock: Lower oil prices bite

ConocoPhillips is down 1.9% after reporting a sharp drop in profits as lower oil prices bite. The oil and gas giant earned around d 38% less per barrel in the second quarter compared to last year, resulting in a sharp drop in EPS to $1.84 from $3.96.

Meanwhile, Occidental Petroleum is down 2.8% after missing expectations in the latest quarter. The company followed rivals by reporting a sharp drop in adjusted EPS to $0.68, which fell short of the $0.72 forecast. Revenue also plunged more than expected after falling 37%, as higher production was countered by much lower prices. The money earned on each barrel of oil was around 32% lower than last year while gas prices have fallen 78%! Occidental said it plans to produce 1% more oil and gas this year than previously expected.

Tesla stock: Deliveries out of Shanghai plunge

Tesla stock is down 0.7% and at July-lows in extended hours. It sold 64,285 cars made in China during July, some 31% lower than what we saw in June. That marked the first month-on-month drop of this year and resulted in deliveries hitting their lowest level in 2023, according to preliminary data from the China Passenger Car Association. Still, that was more than double what it shipped in China compared to last year. Tesla has been prioritising volume growth over profitability this year after introducing a series of price cuts to make its cars more affordable and to drive adoption.

UPS stock: Union members head to the polls

UPS is down 0.3% as its workers that are part of the Teamsters union start to vote on a tentative contract struck in the hope of avoiding disruption. The union represents some 340,000 workers at UPS, which could strike if a deal is not reached. The deal on the table is offering better pay, more paid holiday and better conditions. The vote on the deal will last until August 22.

Airbnb stock: Bookings growth continues to slow

Airbnb is down 0.7% ahead of second quarter results out after markets close today. The brakes have been applied to bookings growth, which is seen rising 13.6% in the period as comparatives remain tough, and we are also starting to see prices ease, which in turn is resulting in lower take-rates. Still, its results are still moving in the right direction. Revenue is forecast to rise 15% from last year to $2.4 billion and adjusted Ebitda is seen climbing 2% to $725.7 million, with net income to grow at a faster rate of 11% to $494.2 million.

Block stock: Cash App to keep leading profits higher

Block is down 1.4% and at three-week lows ahead of results after the close. The payments company is forecast to report a gross profit of $1.8 billion, up some 22.8% from the year before, led higher by Cash App and complimented by strong increases at Square. Adjusted Ebitda is seen rising over 57% to $295.2 million and its net loss at the bottom-line is seen narrowing to $110.7 million from $209.3 million last year.

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