Reddit Stocks: What meme stocks are trending today? – August 29, 2023

US futures

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

US futures are trading slightly lower today as markets try to hold their nerve ahead of a deluge of economic data out this week.

Atop the economic calendar today is JOLTS job openings for July. Economists are forecasting a reading of 9.465 million, down from the previous reading of 9.582 million. There is also CB consumer confidence for August, while the S&P/Case-Shiller home price index will keep housebuilders like Lennar, DR Horton and NVR on the radar.

That will be followed by a data dump later this week, with jobs, inflation and economic growth data due out across Wednesday and Thursday, when markets will be evaluating how the US economy is performing as they hold-out their hopes for a soft landing.

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. AMC Entertainment
3. VinFast
4. Tesla
5. C3.ai
6. Visa
7. Carvana
8. Best Buy
9. Advanced Micro Devices
10. NIO

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. Better Home & Finance
2. Nikola
3. Farfetch
4. Tesla
5. Hawaiian Electric Industries
6. AT&T
7. VinFast
8. Verizon
9. Palantir
10. Globalstar

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.

NVIDIA stock: Valuation multiple hits 2023-low

NVIDIA shares are down 0.6% this morning at $465.40 as markets refuse to push the chipmaker higher in wake of its stellar results out last week despite the extremely bullish view of Wall Street.

NVIDIA briefly hit fresh all-time highs after the results were released before swiftly falling back. A massive beat, another lift to its outlook and a $25 billion buyback failed to drive the price higher, having already more than trebled in 2023. Buyers have struggled despite brokers being about as bullish as it can get right now, with the average target price among the 50-plus brokers that cover the stock sitting at $622, implying around 33% potential upside from here. Some see it going as high as $1,100 in the next 12 months!

The good news is that this dynamic means NVIDIA’s valuation multiple has tumbled to its lowest level in 2023 after estimates were raised following the recent blowout quarter while its share price has failed to gain ground. Its forward price-to-earnings ratio now stands at less than 35x. This is still a premium of over 40% compared to its rivals, but is down from the lofty numbers we have seen in recent months. A week ago, before the latest results, it stood around 46x and it hit as high as 64x back in May.

August has not been kind to C3.ai stock

C3.ai shares are up 0.1% before the bell at $29.26. The stock has lost ground for four consecutive weeks, having plunged over 30% since the start of August as the AI-infused rally fizzles out.

It had benefitted from the rampant appetite for AI stocks this year but has suffered along with other smaller AI plays in August. A slip below $28.50 would set a new lower-low in the current correction.

Can Visa follow Mastercard to new highs?

Mastercard shares are trading marginally lower today after popping to fresh all-time highs yesterday, with investors having piled-into the cards and payments giant over the past five months. Its rival Visa is flat and still struggling to climb above the previous all-time high hit in July of $245.40.

Both are up around 17.5% since the start of 2023 as a resilient US economy and buoyant demand for travel has kept payment volumes growing, with both stocks also boasting defensive qualities that are appealing in the current environment.

AT&T and Verizon rise on upgrades

AT&T is up 1.6% while Verizon is up 1.3% after Citigroup upgraded the telecommunications giants to Buy, citing a more constructive investment case for the industry. It said improving cashflow should help reduce net debt and leverage, in turn allowing dividends to be supported.

Regional bank stocks brace for stricter rules

The Federal Deposit Insurance Scheme, which was responsible for sorting out the collapse of several banks earlier this year, is set to outline new rules today that will prepare the industry for future problems by ensuring banks can be easily dismantled if they run into trouble.

The FDIC will vote on five separate proposals at a meeting today that are designed to ensure all banks with over $100 billion worth of assets are adequately prepared for failure. The rules that could be introduced include ones that would require them to issue more longer-term debt and hold more cash to cover potential losses.

3M settles earplug lawsuit for $6 billion

3M shares are up 0.9% today after agreeing to pay $6 billion to settle hundreds of thousands of lawsuits that allege it sold faulty combat earplugs that caused US soldiers to lose their hearing. The company did not admit liability but has been trying to move on from the matter throughout this year.

The settlement will be paid between 2023 and 2029 and will be made in $5 billion cash and $1 billion in stock.

3M has been losing ground as litigation fears weigh on the stock, which has also recently announced a tentative deal to pay over $10 billion to resolve claims over ‘forever chemicals’ leaking into the US water system.

Best Buy eyes recovery in 2024

Best Buy shares are up 0.6% this morning after it reported a shallowest decline in sales in over a year and signalled it expects to bounce back in 2024.

The company, which has been struggling as consumers shift more spending to necessities and force retailers to offer discounts to shift unwanted inventory, said comparable sales were down 6.2% in the latest quarter. That was the slowest decline in over a year and was better than the 6.9% drop forecast by analysts.

“We continue to expect that this year will be the low point in tech demand after two years of sales declines. Next year the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation,” said CEO Corie Barry.

While it is confident that it can recover next year, it did cut the top-end of its annual sales guidance for 2023 and narrows its adjusted EPS target.

NIO feels the pressure of the price war

NIO shares are down 4.9% after revenue and margins both disappointed in the latest quarter as the price war intensifies in China, but its outlook shows the second half will be much stronger than the first.

Revenue slumped 15% from last year to RMB8.77 billion as lower volumes and prices took their toll, and this was worse than the RMB9.15 billion that was pencilled-in by analysts. Meanwhile, its gross margin hit just 1%. That was worse than the 1.5% we saw in the previous quarter, which analysts thought would be the bottom. Its net loss per ADS came in at RMB3.28, which was also much wider than the RMB2.41 forecast.

On a brighter note, deliveries have been ramping-up in recent months since it unleashed new models and its guidance to deliver 55,000 to 57,000 vehicles in the third quarter for revenue of RMB18.9 billion represented a significant step-up from what we saw in the first half and beat the 48,460 deliveries and sales of RMB17.2 billion expected by analysts.

Is price war hurting Tesla more than BYD?

Tesla shares are down 0.4% before the bell. The electric vehicle maker erased early gains yesterday after its biggest rival in China, BYD, revealed net earnings trebled year-on-year in the latest quarter as it reported a stronger gross margin, suggesting it is not feeling the pressure of the escalating price war as Tesla and others sacrifice profitability by lowering prices to drive demand.

BYD is the biggest automaker in China and reported record delivery numbers in July, showing demand remains on the up as it continues to refresh its lineup and bring down prices.

VinFast becomes 3^rd most valuable automaker

Meanwhile, the rollercoaster ride at VinFast continues, with the Vietnamese electric vehicle company down over 9% today at $72.60. The stock hit as high as $93 yesterday before pulling back to close up almost 20%, giving it a valuation of around $191 billion! It opened on its first day of trading on August 15 at just $22.

That makes it the third most valuable automaker in the world right now! It means it is worth about the same as Volkswagen, BMW and Ferrari combined! Only Toyota and Tesla are worth more.

Tread carefully. The company only went public this month by merging with a SPAC but has a tiny float that it makes it vulnerable to highly volatile movements. This valuation isn’t sustainable. The company is aiming to sell just 50,000 vehicles this year and has only recently entered the US market, where it has had a tough time.

Will Catalent strike a deal with activist investor?

Catalent is up 4.1% amid news that it is on the cusp of signing a deal with activist investor Elliot Investment Management that will see it overhaul its board and review strategic options, including the potential sale of the company, according to reports from Reuters citing unnamed sources.

Catalent is set to add four new directors proposed by Elliott to its board, the report said. Catalent has found itself targeted by the activist investor, and reports it is also a takeover target, after its share price slumped to less than half what it traded 12 months ago and has stagnated throughout 2023.

Carvana stock hits 3-week high on CEO buy

Carvana shares are trading marginally lower after popping over 10% and hitting a three-week high yesterday. A filing made on Friday revealed that the father of CEO Ernest Garcia III purchased over 3.1 million shares on August 18 for an average price of $37.048 per share – in a transaction worth around $115 million.

Insider buying can provide a boost as it shows management believe there is upside value. That batch of shares has already seen its value rise to over $140 million in less than two weeks! Carvana impressed markets last month when it showed it was making progress with its turnaround plan, including a deal to help alleviate its debt burden.

How low can AMC stock go?

AMC Entertainment shares are up 1.6%, having slumped for six consecutive sessions and hitting its lowest level since before meme stock mania gripped the markets in early 2021.

Last week was one of the worst on record for the cinema chain, slumping over 65% after it completed a reverse stock split and converted its APE preferred shares into ordinary stock, diluting existing investors and causing it to lose its shine among its loyal shareholder base.

The APE conversion has also sparked more fears that investors will see their stakes watered down even further in the future if it issues more APE shares and converts them. AMC has been issuing APE shares to raise equity because it doesn’t need shareholder approval, having struggled to convince its retail investor base to give it the green light to raise more equity to fund its recovery from the pandemic.

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