Reddit Stocks: What meme stocks are trending today? – July 13, 2023

US futures

• Dow Jones Industrial Average is up 0.2%.
• S&P 500 is up 0.4% and at a 15-month high.
• Nasdaq 100 is up 0.8% and at its highest level since early 2022.

Risk appetite is still firmly on today following the strong gains booked yesterday when we discovered CPI rose less than anticipated to fuel hopes that interest rates could be approaching their peak. Another 25bps rate hike is firmly baked-in when the Federal Reserve meets this month and yesterday’s data has raised bets that will be the last one and that rates will be held steady for the remainder of 2023, with hopes of a pivot toward cutting interest rates in early 2024, according to the CME FedWatch Tool.

Today we found out that PPI rose 0.1% month-on-month as expected in June following the 0.4% fall we saw in the previous month. Core PPI was also up 0.1% as forecast from the 0.2% rise we saw the month before.

Meanwhile, initial jobless claims rose 237,000 in the week to July 8 following the 249,000 rise we saw the week before. That was less than the 241,000 growth forecast by economists.

Cooling inflation twinned with the resilience seen in the labour market is also reinforcing hopes that any potential downturn or recession this year could be mild.

The economic calendar for the rest of the day is light, with the US monthly budget statement and a speech from the Federal Reserve governor Christopher Waller.

Q2 earnings season is approaching

The start of US earnings season this week could also bring surprises as it ramps up, with the S&P 500 forecast to report its worst set of earnings in two years while recession risks weigh on the outlook for the second half. Investors are hoping estimates are too pessimistic and that corporate America can help keep up the momentum in stock markets following that welcome inflation data.

Major US banks are set to kick things off tomorrow when JPMorgan, Wells Fargo and Citigroup report results. Those most exposed to rising interest rates are set to outperform those that lean more toward trading and investment management. A clean bill of health from the recent stress tests provides some certainty following the banking crisis we saw in March, but tighter capital requirements are coming and recession risks are increasing. Provisions are growing as a result as the sector becomes more pessimistic about the outlook. You can find out everything you need to know, from dates and consensus numbers to our latest technical analysis, in our US Banks Q2 Earnings Preview.

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. Carvana
2. Rivian
3. NVIDIA
4. Delta Air Lines
5. Visa
6. Meta
7. Tesla
8. C3.ai
9. Apple
10. CAVA Group

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. SoFi
2. Lucid Group
3. Delta Air Lines
4. Carvana
5. Rivian
6. Virgin Galactic
7. Nikola
8. Carnival
9. Tesla
10. Recursion Pharmaceuticals

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

Delta Air Lines is up 3.8% and at its highest level in over two years after delivering an earnings beat in the latest quarter and raising its full year outlook to reinforce expectations that the industry is firmly back on the right trajectory as the recovery from the pandemic continues. Revenue rose 19% from last year to $15.6 billion. That was a new all-time record and smashed the $14.4 billion estimate. Adjusted EPS of $2.68 also hit a new record high and beat the $2.40 estimate. Delta Air Lines said it is now expecting annual adjusted EPS of $6 to $7, up from its previous goal of $5 to $6. That would also mark a new annual record if achieved. CEO Ed Bastian said domestic demand is resilient and that international travel is strong across the board. That is lifting other airlines, with American Airlines, United Airlines and Southwest Airlines up 2.2% to 2.6% today.

PepsiCo is up 2.4% after raising its full year outlook as the beverage and snack giant remains in demand and flexes its pricing power. It said it is now anticipating annual organic revenue growth of 10%, up from its previous goal of 8%, and that core EPS at constant currency will be up 12%, up from its last goal of 9%. That came as organic revenue grew 13% in the second quarter, beating estimates, while core EPS of $2.09 was well ahead of the $1.96 forecast.

ConAgra Brands is down 1.4% after forecasting annual sales and profit that disappointed markets, signalling that higher prices could start to be eating away at demand. The company said organic net sales in the new financial year will be around 1%, which was disappointing compared to the 2.8% growth anticipated by analysts. Adjusted EPS this year will be between $2.70 and $2.75, which was also weak compared to the $2.85 forecast. ConAgra reported a 6.4% rise in annual sales in the recently-ended year and a 17% rise in adjusted EPS to $2.77, although the reported figure was down 23%!

Disney is up 0.7% after extending CEO Bob Iger’s tenure by two years to the end of 2026, giving more time for him to identify a successor. He rejoined the House of Mouse last year to help revive its fortunes and was due to leave by the end of 2024. That will help steady the ship after Needham predicted Disney could be bought out within the next three years, citing the lack of a permanent CEO as one of the reasons it could be easily snapped-up – although it has incorrectly predicted this before.

Exxon Mobil is trading marginally higher after announcing it is acquiring Denbury, which is up 0.6% at $88.25. The all-stock transaction values Denbury at $4.9 billion and is worth $89.45 per share based on Exxon Mobil’s closing price yesterday. That will see Denbury shareholders receive 0.84 of an Exxon Mobil share for each current Denbury share they hold. Exxon Mobil said this was to help it expand its lower carbon projects. The acquisition will see it buy the largest CO2 pipeline network in the US and 10 sequestration sites.

Visa is trading higher and set to test its highest level in almost three years today, while Mastercard is set to open at fresh all-time highs.

Tesla is up 0.8% this morning. The electric carmaker is discussing an investment proposal with the Indian government about establishing a factory large enough to produce about 500,000 vehicles a year, according to a report form the Times of India. Some of those vehicles could be exported to other countries in the Indo-Pacific region. India has been pushing its red line that Tesla must produce cars locally if it wants to sell them in the country. CEO Elon Musk and prime minister Narendra Modi met last month to discuss investment opportunities.

Rivian is down 1.5% after closing at a fresh 2023-high yesterday. Future Fund managing director Gary Black highlighted that Rivian could become a takeover target for a legacy automaker looking to electrify their lineup. He said Rivian’s exposure to the two fast-growing parts of the market, crossover utility vehicles and pickups, would make it more appealing versus other smaller EV stocks like Lucid Group.

Meanwhile, Lucid Group is down 1.1% after taking a heavy tumble yesterday when it delivered fewer vehicles than anticipated in the second quarter. The company delivered 1,404 vehicles in the second quarter, broadly level with what it shipped in the first, while production was down 6% sequentially. That was significantly below the 1,873 deliveries forecast by Wall Street. It also lowered its 2023 production forecast, hurting sentiment about its prospects this year. That is especially true after both Tesla and Rivian posted better-than-expected deliveries in the period. Cantor Fitzgerald said the deliveries were ‘slightly disappointing’ but applauded the beginning of shipments to Saudi Arabia.

Nikola is among the most traded stocks before the bell and is up 2.2%. The company announced today that it has signed a deal with BayoTech to develop a reliable hydrogen supply for commercial electric vehicles, including its own electric trucks. This will see BayoTech buy up to 50 of Nikola’s electric trucks over the next five years, while Nikola plans to buy hydrogen supplies from BayoTech starting in 2024. The share price has come under pressure this week as concerns grow about its fundraising plans. Evercore ISI suspended its rating on the company yesterday, saying the timing of any potential fundraising is too unclear. ‘Nikola is further complicated by shareholder votes required to increase the number of authorized shares, as well as a campaign by former CEO and current shareholder Trevor Milton against the proposal,’ the broker said in a note.

NVIDIA is up 1% and set to open at fresh all-time highs today. The chipmaker has found it more difficult to find higher ground over the past month but has found support this week from news it could become an anchor investor in chip design giant Arm ahead of its anticipated IPO later this year. We may have also seen investors take advantage of the pullback seen over the past month as an opportunity to buy into its AI prospects, although its valuation remains lofty compared to its rivals.

Notably, Recursion Pharmaceuticals more than doubled in value yesterday after NVIDIA made a $50 million investment. Recursion uses machine learning to find new drugs and is down 18% today.

Apple is up 0.6% as its lingers below that $3 trillion valuation it earned earlier this month.

Alphabet is up 1.4% at $120.54 after TD Cowen bumped-up its target price on the Google owner to $140 from $130 this morning. The company launched its AI chatbot named Bard in Europe today after addressing privacy concerns. It has also launched it in Brazil and added new features.

Microsoft is up 0.6% and Activision Blizzard is up 0.7%. Both stocks gained ground yesterday, with Activision popping 10% to hit a two year high, as regulatory barriers to their $69 billion combination fell away. A US judge ruled the Federal Trade Commission had failed to show the deal would harm competition, which on turn prompted UK regulators that currently oppose the deal to soften their stance. However, the FTC has now said it will appeal that decision, scuppering hopes that the deal can be completed by the impending July 18 deadline. UK regulators said they are open to accommodating the takeover if they can modify the deal to allay their concerns.

Meta is up 1.3% at $313.50 and at 17-month highs after the Financial Times reported it plans to launch a commercial version of its artificial intelligence model that will allow businesses to build custom software on top of its technology as it tries to catchup on other AI leaders like Microsoft and Alphabet. Unnamed sources said Meta’s large language model named LLaMA will be customisable when it is released imminently. Brokers are also bullish there is further potential upside to Meta stock. TD Cowen upgraded the social media giant to Outperform and hiked its target price to $345 from $220 as it lifted its estimates. It said it has not included any potential rewards from its new platform Threads but says it expects it to be monestised and that there is further upside potential from Reels. Morgan Stanley also raised its target price on Meta this morning to $350 from $300.

SoFi is heavily traded this morning and is down 3.4% at $8.89. The lender is being hit by a downgrade to Underweight by Morgan Stanley, which said the company is mispriced and should be valued more like a bank than a fast-growing fintech stock. Analyst Jeffrey Adelson also warned the momentum from the restart of student loan repayments this year will be smaller than anticipated.

Coinbase is down 1% at $85.10 after Barclays lowered its recommendation on the cryptocurrency trading platform to Underweight as worries about the regulatory threat facing the industry weighs on confidence. Analyst Benjamin Budish believes Coinbase can be a long-term winner in the broader crypto space but warned there is a lack of near-term catalysts. It set a price target of $70. That means it is missing out on the broader rally in crypto stocks today as bitcoin rebounds, with Marathon Digital and Riot Platforms up 0.3% to 1.3% today.

Carvana is down 7% after closing at its highest level in 11 months yesterday following a stellar rally that started back in early May, when it reported better than expected results and edged closer toward profitability before raising its outlook early last month. The used car retailer is taking a heavy knock today after JPMorgan downgraded it to Underweight, saying its valuation has once again become disconnected to its fundamentals. It set a target price of just $10.

CAVA Group is up 3.2% at $53.68 and set to open at its highest level since going public a month ago. The food company has rallied this week after a string of brokers initiated coverage on the stock with bullish ratings. The current average sits at $45.86, which has now been exceeded.

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