Reddit Stocks: What meme stocks are trending today? – September 12, 2023

US futures

• Dow Jones Industrial Average is down 0.1%
• S&P 500 is down 0.2%
• Nasdaq 100 is down 0.3%

US futures are trading lower. The economic calendar is quiet for the remainder of today, with markets bracing for the latest CPI inflation data to be released tomorrow to gauge what it means for the future of interest rates. Economists are currently predicting we saw an uptick in inflationary pressures during August compared to the month before. That will be followed by PPI figures and retail sales on Thursday.

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. C3.ai
3. NVIDIA
4. Apple
5. Canopy Growth
6. Oracle
7. AMC Entertainment
8. Disney
9. CVS Health
10. RTX

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. Cava Group
2. Nikola
3. Tilray Brands
4. Oracle
5. Tesla
6. Marathon Digital
7. Riot Platforms
8. SNDL
9. Horizon Therapeutics
10. Palantir

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.

Apple iPhone 15 preview

Apple shares are up 0.3% this morning. The company is holding its ‘Wonderlust’ event today at 1000 PT (1300 ET), when it is expected to unveil the new iPhone 15 as well as updated versions of its AirPods and Watches.

Pressure is on for the new device to revive demand after iPhone sales came under pressure in recent quarters. Upgrades are, once again, expected to be incremental and reports have suggested volumes of the iPhone 15 could stay flat versus the 14, although higher prices should keep revenue growing. Wall Street currently believes the new model will allow iPhone sales to return to growth in the 2024 financial year, when analysts believe they will hit a new record high.

We heard today that the new iPhone could be made available in India – an increasingly important market for both demand and supply – for the first time on launch day this year, according to reports from Bloomberg. Apple has been increasing the number of phones produced in the country as it looks to tap into the growing middle-class and reduce reliance on China, where the majority of iPhones are still made.

However, the threat of a potential ban in China, where reports suggest government workers are being told not to use iPhones at work, could sour the mood and hang over the stock. Any ban could dent demand in the biggest smartphone market in the world. China accounts for about 18% of Apple’s revenue but analysts are torn on what the impact could be, with predictions varying from 1% to 20% of its revenue in the country estimated to be at risk.

You can find out everything you need to know about the new model and the potential impact from any ban in China in our How Will the New iPhone 15 Impact Apple Stock?

Slowdown at Oracle’s cloud business spooks markets

Oracle shares are down over 10% before the bell after a slowdown in its cloud business spooked the markets, overshadowing a strong set of quarterly results. That could put it on course to suffer its biggest daily drop since March 2020. Analysts said it failed to meet a high bar for its cloud business and raised questions about when AI will provide a real, durable boost to its results.

The company said revenue rose 9% from last year in the first quarter to $12.5 billion and that adjusted EPS jumped 16% to $1.19. That was ahead of the $12.47 billion in sales and $1.15 EPS pencilled-in by analysts. However, growth at its cloud business slowed to 30% in the first quarter compared to 54% in the fourth. That has dented sentiment about its efforts to catch-up to bigger rivals like Amazon and Microsoft, and suggests AI is yet to provide a major tailwind despite management citing strong enthusiasm for the technology and announcing companies have signed deals for over $4 billion of capacity from its cloud service.

Management said its biggest task is building datacentres to cope with this influx of AI demand, which has been made more difficult due to a shortage in the advanced chips needed to run them. Its outlook for revenue to grow 5% to 7% in the second quarter signalled the broader slowdown will continue and fell short of analyst expectations that had hoped for growth of around 8%.

Can Adobe stock keep up the momentum?

Adobe shares are down 0.4% today ahead of third-quarter results due out tomorrow. Adobe has been one of the best performers in the Nasdaq 100 in 2023, with shares up 66% and lingering not far from levels that were last seen in late 2021! Adobe delivered record revenue and adjusted EPS in the previous quarter and is expected to break both of these when it reports results this week.

Adobe has not been immune to the slowdown in enterprise IT spending but it has proven more resilient than most thanks to strong demand for its array of software, while its high margins have also managed to defy the inflationary environment. The stock has also found support from artificial intelligence, which has become the hottest investment trend of the year. Adobe’s software, particularly its Firefly platform, is in a prime position to be among the first to benefit from the technology considering how well it fits the earliest applications of generative AI for images, text and voice.

Consensus figures and recent commentary from brokers suggest there is a chance of a beat and raise, although this may be necessary to impress given the surge in value this year has raised the bar.

Find out what to expect, including all the consensus numbers to look out for and our latest technical analysis on the stock, in our Adobe Q3 Earnings Preview.

Tesla stock enjoys biggest daily gain since January

Tesla shares are down 0.9% this morning at $271.25 after jumping over 10% yesterday on renewed optimism about its AI prospects, marking its biggest daily gain since late January.

Those gains, which pushed the stock to its highest level in almost two months, were driven by Morgan Stanley upgrading the electric vehicle maker to Overweight, naming it as its Top Pick and hiking its target price to $400 from just $250. The broker said the company’s Dojo supercomputer can unlock its “AI mojo” and add up to a staggering $500 billion to its enterprise value. That is part of a broader view that Tesla is about much more than just selling cars as attention turns to the likes of its robotaxis, self-driving technology and services.

NVIDIA and others to talk AI at White House

NVIDIA is down 0.6% today. The chipmaker, alongside other tech giants including IBM, Adobe and Salesforce are due to be represented at the White House today to discuss what safety measures and guardrails can be introduced on AI.

More companies including Microsoft and Alphabet are expected to join the group tomorrow, when they are reported to be meeting senators behind closed doors in an effort to educate them on the breakthrough technology before they start debating how to legislate the industry.

Alphabet braces for trial over search dominance

Alphabet shares are down 0.6% as markets prepare for a landmark antitrust trial to begin today, when the US Justice Department is expected to argue that Google broke rules to gain its dominance in online search.

Reports suggest the argument will be that Google paid billions to companies like Apple and AT&T to ensure Google remained the default search engine on devices, which has also stoked complaints from rivals like DuckDuckGo that claims it has struggled to gain market share because of Google’s actions. Google argues its dominant position simply reflects the quality of its search engine.

Microsoft is also likely to be among those keeping a close eye on the case, which could last up to 10 weeks according to reports, after reviving its Bing search engine, infusing it with AI tools and declaring war on Google’s monopoly over search earlier this year.

The case was originally brought forward under former US president Donald Trump, but current president Joe Biden has continued to push the trial since taking over.

WestRock and Smurfit Kappa strike merger deal

WestRock shares are up 5.6% at $36.29 while UK-listed Smurfit Kappa is down 9.5% after the pair agreed terms on a merger that will create the world’s largest paper and packaging company worth about $20 billion.

Markets knew the pair were in talks but we now know that WestRock shareholders will get one share in the new company named Smurfit WestRock as well as $5 in cash, giving it a value of around $43.51 per share. That is about a 36% premium to WestRock’s share price before talks were announced, which analysts at JPMorgan said was lofty considering they were expecting a much lower premium of 15% to 20%. That explains why the two stocks are reacting very differently to the news.

Alibaba CEO pushes AI and users to top of priority list

Alibaba shares are down 0.2% after its new CEO Eddie Wu said AI and a “user first” mindset will be his priorities as he outlined his major strategic drivers to workers, according to an internal letter seen by Reuters.

Wu has only been in the job for a matter of days but has wasted no time in putting his stamp on the company, which is embarking on a huge transformation that will see it break itself up into six different businesses in an effort to unlock value for shareholders and revive growth. Wu also outlined plans to promote younger workers to management to adopt a “start-up mindset” and avoid getting “stuck in our old ways”.

The news comes just one day after the surprise resignation of Daniel Zhang, who was the previous group CEO of Alibaba before recently taking charge of its cloud computing business to prepare it for its IPO. Wu is now taking charge of that business too.

CVS Health stock hits 3-week high

CVS Health is up 0.7% this morning and at three-week highs, building on the strong gains booked yesterday, when it booked its biggest daily gain since early August after it reaffirmed its full year guidance and benefited from a note from Wolfe Research that predicted it will regain a four-star quality rating on its largest Medicare Advantage contract for 2025.

CVS lost the rating for 2024, which means it will lose out for bonus payments, but analyst Justin Lake said he believes the “probability is high” that the contract will return to four-stars. CVS warned back in May that operating profit in 2024 could drop by about $1 billion because of the lower ratings. Management are due to speak this morning at a conference in New York. The reiteration of its full year guidance has been embraced after it was cut earlier this year.

Disney and Charter strike deal on content

Disney is up 0.5% and Charter Communications is trading flat after the pair resolved their dispute and found a way to keep the House of Mouse’s content on Charter’s Spectrum cable service.

Disney said the “majority” of its networks and stations have been immediately restored to Spectrum’s 15 million customers after pulling them late last month as it pushed for more money, while Charter argued a whole new model was needed. “This deal recognizes both the continued value of linear television and the growing popularity of streaming services while addressing the evolving needs of our consumers,” said Disney CEO Bob Iger.

The most basic ad-supported version of Disney+ will be made available to Spectrum customers and ESPN+ will be available for those on the Spectrum TV Select Plus package, with the ESPN direct-to-consumer service to be made more widely available once it launches. Charter will also bundle Disney’s streaming services – Disney+, Hulu and ESPN+ - and offer it to its broadband customers.

RTX stock sinks on engine woes

RTX shares are down another 1.4% today at $75.85 and building on the heavy losses yesterday when it warned it will need to spend billions on fixing issues with Pratt & Whitney engines, sending the stock to its lowest level since March 2021.

RTX announced yesterday it will book a $3.00 billion to $3.50 billion hit over the next several years, with the bulk to be booked in the third quarter of 2023, because it needs to remove and check thousands of geared turbofan engines made by Pratt & Whitney that are used in Airbus planes, hundreds of which will be grounded each year as a result. The issue concerns the condition with the powder metal used to manufacture some parts within the engines.

The news has also rocked suppliers around the world, including Japanese firms IHI and Kawasaki Heavy Industries as well as the UK’s Melrose, which owns GKN Aerospace.

Barclays downgraded the stock to Equal-Weight from Overweight this morning as it lowered its target price to $75 from $100, while RBC also downgraded the stock to Sector Perform. TD Cowen cut its target price to $99 from $109, while Citi lowered its view to $82.

The news prompted RTX to lower its sales guidance for the remainder of this year yesterday, although it reiterated its earnings and cashflow target. However, analysts at Barclays and RBC warned they believe the cashflow goal is still at risk, while Citigroup said RTX has become a “show me” story following a raft of bad news.

Canopy Growth leads rally in cannabis stocks

Canopy Growth shares are up another 37% this morning, adding to the strong gains booked yesterday when it rocketed over 80% and hit five-month highs amid a broader rally in cannabis stocks amid hopes that the US government will push ahead and introduce key regulation change that would move the industry closer to marijuana being legalised at the federal level.

Peers like Tilray, Curaleaf and Cresco Labs also jumped yesterday, albeit by a much milder pace compared to Canopy.

Senate banking committee chairman Sherrod Brown said the SAFE Banking Act could be put forward for a vote this month. That is key as it would allow banks to service legal marijuana companies, removing a key hurdle for the industry that is still having to operate with different laws across different US states.

Analysts at Bloomberg Intelligence suggested they only see a 40% chance of it being approved if it does go to a vote. It said it could easily pass at the committee level, but that there is little support for it among GOP leadership. It also said it doubts major publicly-listed banks would be willing to serve marijuana businesses even if it did pass because the drug has still not been legalised at the federal level.

AMC stock remains near all-time lows

AMC Entertainment shares remain in the doldrums but are up 0.5% today, with the meme stock favourite having hit fresh all-time lows yesterday before recouping some ground.

The cinema chain has fallen out of favour since converting APE preferred shares into ordinary stock, diluting investors that are increasingly worried that they will be diluted further as AMC needs to keep raising equity to fuel its prolonged recovery from the pandemic.

The RSI has now been stuck in deep oversold territory for three weeks but that has done little to attract buyers back into the market. We have seen trading volumes fall for four consecutive sessions to suggest the selloff is running out of steam, but it has ultimately lost its shine among retail traders after losing over 80% of its value in the last month alone!

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