Top Reddit stocks to watch
Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours on December 6, 2022, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) have been excluded.
- Enphase Energy
US futures are trading slightly higher this morning and recovering some of the ground lost yesterday when it was revealed that the US service sector has remained far more resilient than anticipated to suggest the economy remains strong despite the Federal Reserve’s efforts to combat inflation. The Dow Jones Industrial Average is up 0.1% while the S&P 500 is up 0.2%. The tech-heavy Nasdaq 100 is trading 0.3% higher. The latest data points have thrown doubts over the pace of interest rate hikes and where the terminal rate will end and how long they will stay there. The Fed is widely expected to slow the pace of its hike to 50bps after four consecutive 75bps hikes when it makes its last decision of 2022 next week, although there are fears that they will need to ultimately climb higher than previously expected for the Fed to achieve its goals.
That is tempering any optimism coming from signs that China is slowly easing COVID-19 restrictions, as is news that the race for Georgia’s US Senate seat will go to a runoff and risk providing a majority in the upper chamber to either the Democrats or the Republicans – with markets preferring a split government that would prevent any radical changes or policies being pushed through.
Tesla shares sank 6.4% yesterday and are up 0.4% this morning. The heavy losses experienced yesterday were the result of reports from both Reuters and Bloomberg that claimed the electric vehicle maker is planning to cut production at its Shanghai factory but up to 20% in December. A company spokesperson in the country denied these reports and said they were ‘untrue’ while Shanghai Securities News cited unnamed sources as describing the claims as ‘false information’. However, this failed to allay fears among the markets that have been spooked despite the revelation that Tesla delivered 100,291 vehicles from the plant last month, according to the China Passenger Car Association. That was up from 71,704 deliveries in October and marked the highest monthly sales total since the factory opened back in 2020. It appears Tesla needs reassure the markets, which are becoming increasingly concerned about increased competition and wavering demand as we approach 2023.
Apple shares are up 0.7% this morning as investors continue to focus on the company’s ability to overcome supply snags and meet demand for its premium iPhone 14 models this busy holiday shopping season. Apple has already warned it will ship fewer phones than originally anticipated because of supply chain and Covid-19 disruption in China, with reports suggesting it could be facing a shortfall of up to 6 million units as a result and that many will struggle to get their hands on the iPhone 14 before Christmas. However, things appear to be improving. Its largest supplier Foxconn, which runs the largest iPhone factory in China that was subject to unrest last month, said it expects to return to full production sometime in late December or early January so long as it can recruit new workers in a timely manner. UBS said today that wait times for its iPhone Pro and Pro Max have improved in the US this week to around 25 days from 38 days two weeks ago, although the improvement in China has been more limited and fallen to 36 days. ‘If the rate of improvement continues in the US, it might be possible for consumers to receive a new iPhone 14 Pro or Pro Max in time for Christmas,’ said analyst David Vogt. Meanwhile, CNBC reported Apple is thinking of moving some iPad production to India as it continues to diversify output and reduce reliance on China. Apple also launched its self-service repair service in Europe today, which will allow users to purchase genuine parts and tools to fix their devices themselves.
Meanwhile, the CEOs of a number of companies including Apple, Micron Technology and NVIDIA are expected to join president Joe Biden today at the unveiling of a new $40 billion US chip factory owned by Taiwanese giant and the largest contract chipmaker in the world TSMC. The facility in Phoenix, Arizona, represents one of the biggest single foreign investments into the US ever and is seen as key as the country tries to wean itself off relying so heavily on supplies of semiconductors from China. ‘Bringing TSMC’s investment to the United States is a masterstroke and a game-changing development for the industry,’ said NVIDIA founder Jensen Huang. Those companies are expected to be among the first customers to receive chips from the factory when it starts production sometime in 2024.
Amazon shares are up 0.6% before the bell after testing one-month lows yesterday. There are concerns that its cloud-computing division that drives both growth and earnings, Amazon Web Services (AWS), could see the foot continue to come down on the brakes going forward as rising interest rates and recessionary fears prompt businesses to tighten their belts and scrutinise their spending on infrastructure, according to CNBC over the weekend. The CEO of travel firm Expedia recently said that cloud computing is an area where it plans to make savings by cutting fixed costs while the National Football League has also signalled it wants to lower spending in this area. AWS made an effort to outline ways that customers can get more out of their cloud computing spending at its AWS Reinvent conference last week. ‘If you’re looking to tighten your belt, the cloud is the place to do it,’ AWS CEO Adam Selipsky said to suggest Amazon is willing to take a short-term hit if it helps it retain customers over the long-term. ‘We do see some customers who are doing some belt-tightening now,’ Selipsky conceded. That comes after we saw growth moderate across the industry in the latest quarter, with Microsoft and Alphabet also having seen toplines at their cloud arms rise at a slower pace.
Microsoft shares are up 0.1% today after offering its rival Sony a 10-year deal to keep the popular Call of Duty video game available on the PlayStation, according to the Wall Street Journal. Microsoft is currently in the process of buying Call of Duty maker Activision Blizzard but has faced criticism for what it could mean for gamers and competitors, with several regulators looking into the deal. Sony has previously been offered a three-year deal to keep the titles on its platform but described this as inadequate. ‘The main supposed potential anticompetitive risk Sony raises is that Microsoft would stop making ‘Call of Duty’ available on the PlayStation. But that would be economically irrational,’ Microsoft president Brad Smith said in the WSJ opinion piece.
Coinbase shares are up 0.4% before the bell as the cryptocurrency platform continues to try to distance itself from the calamity at FTX, which has made the existing crypto winter even icier for the markets. Coinbase CEO Brian Armstrong has lambasted FTX’s founder Sam Bankman-Fried on several occasions since the platform filed for bankruptcy after misappropriating some $8 billion worth of customer funds. ‘It’s stolen customer money used in his hedge fund, plan and simple,’ Armstrong said last week. ‘I think we were all pretty shocked to see the scope of fraud that happened at FTX. And let’s call it a fraud. We have to call it what it actually is.’ Armstrong has laid the blame at Bankman-Fried and said it is ‘baffling to me why he’s not in custody already’.
GameStop shares are up 1% in premarket trade on reports that the video game retailer and meme stock favourite has initiated a round of job cuts, according to an unnamed source cited by Axios. The team responsible for building its blockchain wallet that was launched earlier this year is thought to be the most impacted by the layoffs, but the overall number of workers at risk is not known. That comes ahead of third quarter results due out tomorrow, when its relationship with FTX is also likely to be under the spotlight. Investors are keen to know what impact the FTX collapse could have on the company, which swiftly abandoned a partnership with the crypto platform just weeks after establishing it when the crisis erupted. Consensus numbers from Bloomberg suggest markets are anticipating a 7.1% year-on-year rise in revenue to $1.38 billion and for its adjusted loss per share to narrow to $0.29 from $0.35 in the third quarter of its financial year – although this is comprised of estimates from just two brokers. Wedbush Securities has warned that GameStop is likely to have continued to burn through cash in the quarter and that this could continue into 2023, warning that it may have to raise equity if it isn’t able to cut costs dramatically – which could make the reports of job cuts all the more important.
Meanwhile, Goldman Sachs is up 0.1% on reports that the bank is looking to capitalise on the depressed crypto market by spending tens of millions of dollars on buying or investing in cryptocurrency companies. The bank’s head of digital assets Mathew McDermott said the firm was conducting due diligence on several companies in an interview last month, stating there are ‘some really interesting opportunities, priced much more sensibly’. The bank’s CEO David Soloman has previously said he views the sector as ‘highly speculative’ but believes the underlying technology could have potential.
Citigroup shares are up 0.7% this morning. Bloomberg reported yesterday that mining firm Grupo Mexico SAB is in advanced talks about purchasing Citigroup’s retail bank in Mexico named Banamex, but said Citigroup is still considering spinning-off the business through an initial public offering as it continues to slimdown its international operations. That came as US banks suffered heavy declines yesterday as stronger-than-anticipated data from the US service sector reignited fears that the Federal Reserve will need to keep hiking interest rates, raising the risk of plunging the economy into a recession. Citigroup, JPMorgan, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America all declined between 2.5% and 3.7% yesterday. While rising rates help boost the profits of banks as they can reap more from loans and mortgages, it also raises the risks of hurting the economy, which in turn could dampen demand for loans and make it more difficult for people and businesses to repay them.
Enphase Energy shares are trading marginally higher before the bell at $336 after hitting fresh all-time highs yesterday. The company, which makes energy-related technology such as micro-inverters used in solar panels and battery storage, has risen over 82% since the start of 2022. The rally continues, but the 33 brokers that cover the stock believe this has been overdone considering they have an average target price of $315.17 on the stock – although this has risen significantly from just $280 three months ago.
Gitlab shares are up over 18% and on course to open at a three-week high after the open-source software company beat expectations in the third quarter and raised its outlook for the rest of the year. Revenue jumped 69% from last year to $113 million while its adjusted loss per share narrowed to $0.10 from $0.34. That was better than the $106.2 million in sales and $0.15 loss pencilled-in by Wall Street. Gitlab said it is now expecting to deliver annual revenue of $420.5 million to $421.5 million rather than its previous target range of $411 million to $414 million and this rose above analyst forecasts. It also said its adjusted loss per share this year will be between $0.55 to $0.56, better than the last guidance for a loss of $0.64 to $0.67. The results were welcomed by brokers, with RBC stating it ‘remains impressed with both the durability of revenue growth and emerging leverage in the model’ as it raised its price target to $60 from $55. Piper Sandler said it thinks Gitlab can continue to capitalise on consolidation tailwinds and said the dynamics remain strong, although it trimmed its price target to $60 from $67.
Tilray is up 0.6% and set to open at their highest level since May amid a broader rise among cannabis stocks after president Joe Biden signed new laws aimed at reforming marijuana legislation in the country on Friday. While the move is focused on research of the drug, it has provided a boost to hopes that the US is, albeit very slowly and gradually, moving toward the all-important federal legalisation of the drug that would undoubtedly prove a major catalyst for the industry. There are also hopes that the government will push ahead with the SAFE Plus Banking act that would positively overhaul the way finance works for the industry before the end of 2022.
US airline stocks are continuing to rise, with some looking to open at their highest level since June today, as markets become more bullish on the industry’s prospects in 2023, which is set to be the first year of annual profits for airlines since the start of the pandemic. The International Air Transport Association said it expects the industry to deliver a net profit of $4.7 billion in 2023, which is far rosier than its prior outlook that suggested it would turn out a mild profit. Airlines are still carrying far fewer passengers today than back in 2019 but their results have improved thanks to higher prices. Still, the IATA warned risks remain, especially due to the COVID-19 situation in China and risks of a recession next year. United Airlines is up 1.2%, American Airlines is up 0.4%, Delta Air Lines is up 0.9% and Southwest Airlines is trading 0.3% higher.
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