Reddit Stocks: What meme stocks are trending today? – August 18, 2023

US futures

• Dow Jones Industrial Average is down 0.4%
• S&P 500 is down 0.5%
• Nasdaq 100 is down 0.8%

US futures are trading lower today, with the Dow Jones Industrial Average at a one-month low while the S&P 500 and Nasdaq 100 are at their lowest level in over seven weeks, capping-off what has been a torrid week for stocks. A three-day selloff, which could continue today, has hammered markets as fresh fears over US inflation and interest rates, as well as an increasingly shaky Chinese economy, knock confidence.

Strong US economic data, including yesterday’s figures that showed a fall in the number of people claiming unemployment benefits to suggest the labour market remains strong, has sparked concerns that interest rates could have to remain higher for longer and pushed-back expectations for the first rate cuts, demonstrated by the rise we have seen in government bond yields.

China is also becoming a bigger concern for markets. The recovery since the economy was reopened has been hugely disappointing so far and the latest data suggests domestic and international demand is waning. Problems are also shaking the country’s huge property sector after Evergrande filed for bankruptcy protection in the US soon after Country Garden missed international debt payments.

There are no major events in the economic calendar to provide a catalyst today, and the big results have been released before the market open.

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. NVIDIA
2. Tesla
3. Visa
4. Apple
5. C3.ai
6. Walmart
7. Advanced Micro Devices
8. PayPal
9. Palantir
10. US Steel

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. Farfetch
2. Hawaiian Electric Industries
3. Nikola
4. Palantir
5. Tesla
6. AMC Entertainment
7. IonQ
8. Marathon Digital
9. Apple
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.

Deere stock: Big beat and raised outlook

Deere & Co shares are down 2% this morning despite beating expectations in the latest quarter and raising its full year outlook as demand for large industrial machinery such as tractors remains buoyant.

The company said it is now targeting annual net income of $9.75 billion to $10 billion in 2023, up from its previous goal of $9.25 billion to $9.50 billion. That came after quarterly adjusted EPS jumped to $10.20, smashing the $8.20 forecast, after reporting a 12% rise in revenue.

Deere said the fundamentals remain strong that demand for its equipment should keep growing, helped by the fact it has a strong order book.

Estee Lauder stock: Momentum improves but outlook disappoints

Estee Lauder shares are down over 6% and at levels not seen since April 2020 after it said it returned to organic sales growth in the latest quarter, although this was overshadowed by a disappointing outlook.

Annual revenue was down 10% at $15.9 billion in the year to the end of June and organic net sales were down 6%. Annual net earnings more than halved to $1.01 billion from $2.39 billion, or to $2.79 from $6.55 on a per-share basis. However, the company said it delivered organic growth in the final three months of the year, when it said momentum in regions like China, EMEA and Latin America continued to build. Still, a rebalancing of inventory in Asia is hurting its travel business and the uncertain economic outlook in the country is also a headwind.

That suggests the outlook is improving, but its profit guidance for the new financial year of $3.43 to $3.70 per share was below analyst forecasts.

“The company aims to return to net sales growth in fiscal year 2024 and over the next few years progressively rebuild its margins,” said the company.

XPeng stock: Price war bites

XPeng shares are down 6.6% and at a one-month low after its failure to make money on each car it makes and a disappointing revenue outlook fuels concerns that it is feeling the heat from the price war in China.

The company posted a negative gross margin of 3.9% in the second quarter, which was hugely disappointing considering analysts had hoped it would be profitable and post a margin of 4.8%. That is stoking fears that the price war in China, as Tesla and domestic rivals continue to lower prices, is making it more difficult for XPeng to escape the red.

This overshadowed what was otherwise a beat. We already knew that XPeng delivered 23,205 vehicles in the second quarter after production rose consistently every month in the first half. Still, deliveries were about 35% lower in the period than a year earlier and this resulted in revenue falling 32% to RMB5.06 billion, but this was better than the RMB4.9 billion forecast by analysts. Its adjusted loss per ADS of RMB1.55, which was also higher than the RMB1.19 estimate.

A weak outlook is also not helping. XPeng said it will deliver 39,000 to 41,000 vehicles in the third quarter, which was roughly in-line with expectations, but its revenue goal of RMB8.5 billion to RMB9.0 billion was short of the RMB9.1 billion forecast.

VinFast stock: Falling back down to reality

VinFast, the Vietnamese electric vehicle maker that went public on the Nasdaq this week, is falling before the bell at $19.50 and on course to fall for a third consecutive session after almost quadrupling in value on the day of its listing.

The listing, completed through a merger with a blank-cheque company (or SPAC), saw its share price soar to over $37 on its first day of trading, up from just $10.45 the day before. That briefly gave it a valuation of over $80 billion, making it worth more than the likes of Ford and General Motors, and giving it a valuation larger than US EV players Rivian and Lucid combined!

However, VinFast only has a small number of shares floated, meaning it is more prone to volatile movements. The company is still ultimately controlled by Pham Nhat Vuong, who is the wealthiest man in Vietnam. This may explain the sharp jolt we saw upon listing, and why we have seen it on a losing streak ever since.

Walmart stock: Are new all-time highs on the horizon?

Walmart shares are down 0.3% today at $155.29. The largest retailer in the US lost ground yesterday after releasing results. The update was upbeat considering it beat expectations and raised its full year outlook, but the bar was high and difficult to clear following the rally we saw ahead of the results.

Brokers raised their target price on the stock to suggest there is more upside from here and that it can achieve new all-time highs. Brokers that upped their view today include Telsey Advisory to $185, RBC to $168, Bernstein to $165 and Barclays to $167. Walmart shares opened at an all-time high of $162 on Monday before pulling back.

US Steel stock: Cleveland-Cliffs wields USW support

US Steel shares are up 0.7% at $30.91 today as markets continue to evaluate what will happen to the steelmaker, which finds itself subject to multiple takeover bids.

In the latest development, the US Steelworkers’ union has transferred its right to make a bid for US Steel to bidder Cleveland-Cliffs in another sign of support after it said it would not back any other deal. Cleveland-Cliffs said this means it is the ‘only realistic buyer able to acquire the totality of US Steel’.

Cleveland-Cliffs was the first to emerge and tabled a $7.3 billion deal, half in cash and half in stock, last weekend but this was rejected by US Steel. Since then, a private company named Esmark has stepped up and placed a higher bid of $7.8 billion, which is also all in cash.

Although Cleveland-Cliffs has been outbid, it remains confident because of the support from the United Steelworkers’ union. However, a potential fight is brewing after US Steel said today that the USW does not have the right to veto any deal and only has the right to counter any other bids that are made – and this would have to be superior to prevent US Steel selling itself to another party. That suggests Cleveland-Cliffs will still have to make the best offer if it wants to secure the deal.

We heard reports this week that other parties may be interested, leaving scope for another bidder to emerge. Luxembourg-based ArcelorMittal is rumoured to be weighing a possible bid, although be deterred by the steadfast support of the union to Cleveland-Cliffs after the USW president Tom Conway described the idea of ArcelorMittal pacing a bid for US Steel as “foolish”.

Applied Materials stock: Rosy outlook lifts shares

Applied Materials shares are up 0.8% and rebounding from three-week lows after beating expectations in the latest quarter and posting a rosier outlook than anticipated as governments unleash tens of billions in dollars of subsidies over the coming years and demand picks up in China.

Revenue of $6.43 billion and adjusted EPS of $1.90 in the second quarter was well ahead of forecasts for sales of $6.16 billion and earnings of $1.74. It said it should generate revenue of around $6.43 billion and earnings of $1.82 to $2.18 in the third quarter, which was also significantly above the $5.86 billion in sales forecast by analysts, which had pencilled-in EPS of $1.61.

Applied Materials said governments are spending substantial sums on increasing domestic semiconductor supplies, helping boost demand for its chip-making equipment. Still, overall demand will be lower this year than last, although its services division remains resilient as businesses still need to maintain existing machines.

NVIDIA stock: Interest is tempered ahead of results

Markets have found renewed interest in NVIDIA shares this week after a wave of brokers said there was a buying opportunity following the recent pullback ahead of its quarterly results next week. However, markets appear to be more cautious after the stock set its third consecutive lower-high since peaking at all-time highs back in May. NVIDIA is down 1.4% today at $427.60.

The stock has been the best performer in the S&P 500 this year, with its valuation having trebled since the start of the year despite the pullback we have seen in the share price during August. That is because it is the only major company set to reap bumper financial rewards from the eruption of artificial intelligence in 2023 as businesses snap up its advanced chips to upgrade their systems so they are ready for the breakthrough technology.

That is set to see NVIDIA deliver record revenue in the second quarter, adding almost $4 billion in sales compared to what we saw in the first to demonstrate the level of demand for AI chips. Those pricey chips are also forecast to help adjusted EPS quadruple from last year! The biggest threat is its ability to keep up with demand, so commentary on supply and the outlook will be highly influential.

Numerous brokers raised their target price to over $500 this week, with one hiking it to as high as $800, on their confidence NVIDIA will beat what are already rosy expectations and see potential for its outlook to be increased.

AMD stock: Hits 3-month low

Fellow semiconductor maker AMD is down 1.6% and poised to open at its lowest level in three months, having set a series of lower-highs and lower-lows over the past two months.

Apple stock: Where is the bottom?

Apple shares are down 0.9% and are set to open at their lowest level in almost three months, with the company now having fallen over 9% since releasing its last set of quarterly results that failed to meet what was a high bar as iPhone sales declined thanks to the crunch in demand for smartphone upgrades.

Notably, the RSI has now entered oversold territory for the first time in almost a year, which may attract some interest from buyers.

Tesla stock: Margin woes sink it to 11-week low

Tesla shares are down 2.4%, hitting an 11-week low, and on course to lose ground for a sixth consecutive session. The electric carmaker continues to feel the pressure despite shedding about 25% of its value since its last set of results, when CEO Elon Musk reiterated Tesla is prioritising growth through price cuts and sacrificing profitability to ensure deliveries keep growing.

The RSI has entered oversold territory for the first time since the start of 2023.

Palantir stock: Does 2-month low confirm reversal?

Palantir shares are down 3% and at a two-month low of $13.73, having suffered heavy selling pressure yesterday to suggest the stock is firmly in reversal after surging between May and August. The stock has lost about 30% in value since peaking at the start of this month and sellers appear to be continually accepting lower prices. The next key level to watch is the June-low of $13.60.

WeWork: Reverse stock split

WeWork shares are down 13.9% after announcing plans to conduct a 1-for-40 reverse stock split, which will become effective when markets open on September 1 with shares to start trading on a split-adjusted basis on September 5.

This will see shareholders issued one share for every 40 they currently hold. That is designed to lift the value of each share above the minimal threshold of $1, having sunk over 88% this year to trade at just $0.14 today after warning it was at risk of going bankrupt.

AMC stock: Is it overvalued?

AMC Entertainment shares are down 2.2% at $3.95 after Citigroup lowered its target price to $1.55 from $1.65, showing that brokers continue to believe the meme stock favourite and cinema chain is overvalued.

The stock has been in play since AMC won court approval to convert its APE preferred shares, which are up 0.5% at $2.20, to be converted into ordinary shares and dilute existing investors.

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