Reddit Stocks: What meme stocks are trending today? – September 6, 2023

US futures

• Dow Jones Industrial Average is down 0.2%
• S&P 500 is down 0.2%
• Nasdaq 100 is down 0.3%

US futures are trading lower ahead of key economic data out this afternoon, which will provide the latest insight into the state of the US economy and the possible path of interest rates as inflationary concerns seep back into the market, partly thanks to the recent rise in oil prices.

The economic calendar today is headlined by service PMIs, with the Fed’s Beige Book also due out. We also have speeches out from several Fed members today, including Boston president Susan Collins and Dallas president Lorie Logan.

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. NVIDIA
3. C3.ai
4. Novavax
5. Visa
6. Apple
7. Advanced Micro Devices
8. Tilray
9. Meta
10. Zscaler

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. Tesla
2. Nikola
3. NextGen Healthcare
4. Tilray
5. Roku
6. FuboTV
7. Apple
8. American Airlines
9. Snap
10. Southwest Airlines

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.

ExxonMobil, Chevron and others follow oil price dip

Exxon Mobil, Chevron and Occidental Petroleum are all trading marginally higher this morning, despite the dip we have seen in oil prices today. WTI gained ground for six consecutive sessions and breached $86 per barrel for the first time in almost a year yesterday, supported by news that Saudi Arabia and Russia have extended production cuts until the end of 2023. We have seen demand temper today, with WTI down 0.5% today.

The production cuts point to further upside potential for oil for the remainder of 2023, especially as inventories (particularly in the US) are in decline and suggest the market will continue to tighten. However, immediate gains may be harder to come by given the sharpness of the recent rise, which has pushed the RSI on WTI on the verge of overbought territory.

Still, the spike in prices recently will heighten fears that oil could contribute to inflation remaining elevated as central banks keep fighting to bring it down.

Airline stocks descend on higher fuel prices

Southwest Airlines, United Airlines and Alaska Air Group are all trading lower before the bell after all three warned today that they will report higher fuel costs in the third quarter thanks to the rise in oil prices, heightening cost pressures as they also face rising wage costs.

Southwest said it now expects to pay $2.70 to $2.80 per gallon of fuel in the third quarter, up from its previous guidance of $2.55 to $2.65. It also lowered its revenue per available seat mile for the quarter.

United said fuel prices are up 20% since mid-July and that it will now pay $2.05 to $3.05 per gallon in the third quarter.

Alaska Air fared worse as it downgraded an array of guidance targets for the third quarter and said it will pay $3.15 to $3.25 per gallon in the quarter and lowering its goals for capacity, revenue growth, and profit margin.

EU Commission says Big Tech are ‘gatekeepers’

Big Tech stocks Alphabet, Amazon, Apple, Meta and Microsoft, as well as Tik Tok-owner ByteDance, have been designated as ‘gatekeepers’ to online services by the EU Commission, which is shaking-up the sector with its Digital Markets Act that came into force last year.

Regulators have said that any company with a market cap of over EUR75 billion and over 45 million monthly active users are considered gatekeepers. The Commission has now said they have six months to comply with new rules and has signalled that it could be tougher on any M&A activity.

Chinese government workers banned from using Apple iPhone

Apple shares are down 0.7% and falling from one-month highs after Chinese government workers were told they cannot use iPhones at work, according to a report from the Wall Street Journal. “Some” central government staff have been told of the new rules, but it is not known how widely-imposed the new restrictions are, the report said.

Government agencies and state-owned businesses have been told to replace foreign computers with alternatives made in China since last year.

Can Tesla stock break above $258?

Tesla shares are down 0.2% at $256 after experiencing some volatile moves in recent days, with the stock having faced resistance every time it has tried to push above $258 over the past four sessions.

Indonesia’s coordinating maritime affairs and investment minister Luhut Panjaitan said he is not expecting Tesla to invest in a plant in the country over the coming years because Tesla is more cautious about the state of global growth and because there are fears that it will have too much capacity.

Meanwhile, Tesla’s factory in Shanghai reached a milestone after producing its 2 millionth vehicle today, it announced on its local WeChat account. That came just a day after we discovered deliveries from the factory were over 30% higher in August compared to June and soon after it launched its newly revamped Model 3 in the country.

Is NVIDIA stock undervalued or in a bubble?

Wall Street is about as bullish as its gets when it comes to NVIDIA despite the rapid rise we have seen in 2023 as hype around AI takes-off, but not everyone in the market is convinced the rally can continue. NVIDIA is down 0.3% this morning.

The founder and chairman of asset management firm Research Affiliates, Rob Arnott, described the surge in NVIDIA shares as a “textbook story of Big Market Delusion”.

“The risk that we’re wrong, that NVIDIA’s off to incredible things and will go up another 10-fold in the coming 10 years is possible,” Arnott said according to a Bloomberg report. “I would say it’s not plausible, and therefore I’m comfortable calling it a bubble”.

NVIDIA is the best performer in the S&P 500 this year and has more than trebled in value after becoming the first major winner to reap financial rewards from the breakthrough technology, but Wall Street sees, on average, over 27% potential upside from here with an average price target of $620 – with the highest target set at $1,100! Analysts remain confident we are not in a bubble as valuations are not as stretched as they have been in the past.

AMD tries to catch-up on AI

Advanced Micro Devices is trading marginally lower after climbing to a two-week high yesterday, when CEO Lisa Su said the company has seen a “very strong second half of the year for our datacentre business” during a Goldman Sachs conference.

The CEO of the chipmaker, which, like its rivals, has underperformed NVIDIA as they are behind in the AI race, said that interest in its new AI chip is translating into sales and had risen over the past month.

“Even since our last earnings call, over the past 30 days, what we’ve seen is a continued acceleration of those engagements [on AI], and a number of those engagements have turned into customer commitments, which we’re really excited about,” said Su. That was welcomed as it suggests AMD is starting to benefit from some AI tailwinds, which is significant considering its datacentre business reported lower sales in the latest quarter due to the absence of a chip good enough to run AI applications.

Can Arm IPO revive the market?

The Arm IPO continues to draw attention ahead of its expected listing next week. The British semiconductor firm priced its upcoming initial public offering yesterday. It will see it offer 95.5 million American depository shares priced at between $47 and $51 each.

That will see it raise up to $4.87 billion and should give it a valuation of over $52 billion! That would make it the biggest US IPO since electric vehicle maker Rivian managed to earn a valuation of $70 billion when it went public in 2021. However, it was previously expected to try to earn a valuation of up to $80 billion, and it is also far below the $64 billion price tag earned when owner Softbank bought the remaining shares in Arm it didn’t already own earlier this year. It is, however, a large premium to the $32 billion spent by Softbank on taking Arm private back in 2016!

A flurry of big names have also said they are interested in buying shares through the IPO, including AMD, NVIDIA, Apple, Cadence Design, Alphabet, Intel, MediaTek, Samsung, Synopysys and TSMC. They could buy up to $735 million worth of Arm shares, although none of them are obliged or committed to purchasing them. 

Having such stalwart backers should help keep its price stable after listing and sends a sign to the market that there is strong appetite at the IPO price, but there are still some big questions over Arm’s valuation.

You can find out more information on the listing in Everything You Need to Know About the Arm IPO or read about its valuation and what it means for the broader market in Can Arm and Instacart Revive the IPO Market?

Visa and Mastercard push back on fee headlines

Visa and Mastercard have both responded to headlines claiming they are raising fees on merchants, causing both stocks to fall from all-time highs. The pair are trading slightly lower before the bell today.

Reports had suggested that Visa and Mastercard were set to reap around $500 million in extra fees from merchants with their plans to up charges. Mastercard said it isn’t planning to raise interchange or network fees in the US as claimed.

Visa issued a blog post yesterday that said reports had been “misleading”, adding its “overall interchange fees on Visa transactions have been flat for the past decade” despite the fact usage has markedly increased and the need to continuously invest to keep its network safe and reliable. It said it had actually lowered fees for the “vast majority of small businesses” in the US.

“Efforts by special interest groups to challenge these facts in the press are simply inaccurate and disappointing. Visa will not be deterred from upholding the promise of our brand – to be the best way to pay and be paid, for everyone everywhere,” Visa said.

Zscaler: Challenging outlook overshadows beat

Zscaler shares are down 1.4% today at $160.50 despite delivering a beat and raise in the latest quarter, with the stock struggling to find higher ground after hitting 11-month highs after management flagged a challenging macro environment.

The cybersecurity company reported a 43% rise in revenue in the fourth quarter to $455 million, well ahead of the $430.4 million expected by analysts. Adjusted EPS of $0.64 was also much higher than the $0.49 forecast. Its sales outlook for the first quarter of the new financial year was rosier than anticipated, while its profit guidance was broadly in-line.

However, CEO Jay Chaudry spooked investors after noting challenging conditions that is prolonging the time it takes to close deals, especially larger ones that are coming under more scrutiny from businesses that have become more stringent with budgets.

Still, Wall Street welcomed the update and a wave of brokers raised their target price on the stock this morning, including Piper Sandler to $160, Jefferies to $170, JPMorgan to $174, Evercore ISI to $200, and RBC to $185.

Novavax and vaccine makers rise on Covid cases

Novavax is up 1.3% and at two-week highs after rising yesterday on news that Covid-19 cases are climbing across the US and that health authorities are tracking a new variant. There were over 15,000 Covid-19 hospitalisations in the week to August 19.

That provided support to Novavax and other makers of Covid-19 vaccines. Notably, Moderna, which is rebounding from two-week lows, said today that its updated vaccine is likely to be effective against the new subvariant that has authorities worried.

Tilray stock falls from 7-month high

Tilray is down 0.3% as interest in cannabis stocks continues to rise after US health authorities recommended that cannabis should be declassified.

Tilray has risen over 36% since officials said late last month that rules should be relaxed, raising hopes that the drug could finally be moving toward legalisation. Most states have legalised marijuana in some shape or form but it is still illegal at the federal level.

FuboTV rises on Disney-Charter dispute

FuboTV is up 2.4% and at a one-month high as investors see the company benefiting from the ongoing dispute between Disney and Charter Communications.

Disney and Charter have been under the spotlight since last week, when Disney pulled its channels from Charter’s Spectrum cable service, including its sports content, as the pair fail to agree on fees. Both have said they hope to strike a new deal, but have both signalled they are also willing to walk away.

Nicholas Zangler, an analyst at Stephens, said there “may be an opportunity for FuboTV to significantly expand its current subscriber base” as a result of the dispute, and highlighted the potential for any boost to allow it to achieve its subscriber target years of ahead of schedule.

Disney is trading marginally higher before the bell after sinking to its lowest level since 2014 while Charter Communications is flat after hitting its lowest level since the start of August.

Roku stock jumps on job cuts

Roku is up almost 13% and at its highest level since early August after announcing it will reduce the size of its workforce by around 10% as part of a restructuring designed to bring down costs. It said it will cost around $45 million to $65 million to implement, excluding any potential impairments on office buildings, with the majority to be booked in the third quarter. It hopes to have made the majority of the job cuts by the end of 2023.

Roku also impressed after revealing it is targeting third=quarter revenue of $835 million to $875 million, which favoured well against Wall Street estimates for just $829.2 million.

Block stock chopped by UBS

Block is trading down 2.7% at $58.54 after UBS warned the payments firm could see a slowdown in gross profit growth as it downgraded the stock to Neutral from Buy.

UBS blamed softer spending on consumer discretionary goods as well as tempering monetisation and slower user growth at Cash App for the weaker profit outlook. It slashed its price target to just $65 from $102!

Can C3.ai stock meet the AI hype?

C3.ai shares are up 0.5% ahead of quarterly results out after the closing bell. The bar has come down following the AI selloff we saw in August, but it remains high ahead of the update. The company has stirred plenty of excitement about its prospects, but pressure is building on it to start delivering.

Management are confident, but we are yet to see a tangible boost from AI. C3.ai is forecast to report a 9.6% rise in revenue in the first quarter to $71.6 million. That is a relatively underwhelming number for a small company that finds itself operating in the hottest space in the market right now. Investors will expect topline growth to start accelerating from this very low base going forward, so C3.ai will need to start converting and monetising all this new interest in AI as quickly as possible.

That growth may fail to get investors excited this quarter, especially as the rally in its share price has added around $2.4 billion to C3.ai’s valuation since the start of 2023. Therefore, a big beat could be needed (although unlikely considering consensus is in-line with its guidance), and/or an impressive outlook. 

You can find out more, including all the consensus numbers you need and our technical analysis on C3.ai stock, in our C3.ai Q2 Earnings Preview.

GameStop stock to face first test since shake-up

GameStop is broadly flat ahead of second quarter earnings due out after markets close and the company is still facing a big task. The video game retailer has been making losses for over three years now and is trying to escape the red, although markets don’t believe it will enter the black anytime soon.

That challenge is all the more difficult without growth. GameStop has seen sales decline over the past year and is expected to report just a 0.5% year-on-year rise in revenue in the second quarter. GameStop may still be loss-making but it is on the right path. Its net loss is predicted to come in at $49.4 million, which would be less than half the loss we saw last year. That is down to a sharper focus on costs and much lower spending. 

Notably, this will be the first set of results since there was a shake-up to the board. Ryan Cohen, the largest shareholder of GameStop, became executive chairman back in June after CEO Matt Furlong was let go. Meanwhile, Daniel Moore was appointed as its principal accounting officer and interim principal financial officer after Diana Saadeh-Jajeh resigned almost a month ago.

You can find out more, including all the consensus numbers to look out for and our latest technical analysis on GameStop, in our GameStop Q2 Earnings Preview.

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